Hotel Brands

Premier Inn owner welcomes better than expected recovery

UK like-for-like RevPAR run rate has the ‘potential to reach full recovery at some point in 2022’

Whitbread has welcomed a recovery that was “ahead of expectations” in the half-year ended 26 August, 2021, as staycations continued to bolster its performance across its sites. 

In particular, it noted a “significant” market outperformance in the UK, with Premier Inn total accommodation sales 12.3% ahead of the midscale and economy market in H1, and 13.9% ahead in Q2.

It comes as recovery in UK demand was “very strong” following 17 May, when overnight leisure stays were once again allowed. 

Leisure demand also remained strong in the UK into the second half of the year, with business demand also improving. In light of this, September total accommodation sales were up 9.7% against FY20.

Overall, total accommodation sales improved from down 60.9% and 9.6% respectively in Q1 and Q2 against FY20, and were up 10.5% in August.

Nonetheless, ​​H1 FY22 statutory revenues were 39.0% down compared to H1 FY20 due to the ongoing Covid restrictions that were still in place during the first half of the period. 

Its adjusted loss before tax of £56.6m still benefited from £141.6m of Covid-19 related Government support schemes, while its statutory loss before tax of £19.3m also benefited from £37.3m of adjusting items credits.

Looking ahead, The Premier Inn owner said its sales recovery is ahead of expectations, and while a “number of uncertainties remain”, UK like-for-like RevPAR run rate has the “potential to reach full recovery at some point in 2022”.

Nonetheless, it warned that hospitality wide-labour shortages still persist, particularly in tourist locations and in London. It noted it was “in a better position than most”, but said a material number of vacancies still remain unfilled. 

It added: “The resolution of this shortfall may well take time, and we have therefore invested in our pay rates to remain competitive, at an additional cost of c.£12m-13m in FY22.” 

Alison Brittain, Whitbread CEO, said: “Whitbread traded significantly ahead of the market in the UK during the first half of the year, with our regional hotels trading ahead of pre-COVID-19 levels in the last six weeks of the half. This strong performance has continued into the second half, with sustained high levels of leisure demand and resilient demand from tradespeople. 

“Whilst some uncertainty remains over the speed and timing of the market recovery for office-based and international demand and the evolution of the pandemic in the winter months, we believe that UK like-for-like RevPAR run rates have  the potential to reach full recovery in at some point during 2022.”

She added: “The operating environment during the summer and into autumn has been challenging largely as a result of our very high occupancy levels, market-wide supply chain issues and a tighter labour supply in the hospitality sector. Although we are not immune from these challenges, we are well placed to respond.  

“Our strong balance sheet enables us to continue investing in hotel growth in both the UK and Germany and in commercial initiatives and refurbishments, strengthening our market position and driving further market share gains. In the UK, our performance is underpinned by our uniquely advantaged and market-leading position, built on our scale, direct distribution, and the strength of the Premier Inn brand.” 

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