Whitbread profits soar 44% amid strong demand

Whitbread profits rose by 44% to £391m in the first half of the year, thanks to a boost in trading from its Premier Inn hotels and F&B business, with results for the period ahead of expectations. 

Across Premier Inn UK, total UK accommodation sales were up by 15% against last year, and 55% above H1 FY20, with strong RevPAR growth seen in both London and the Regions.

The group said there was strong levels of consumer demand from both leisure and business customers over the period. London was “particularly strong”, boosted both by domestic and international inbound demand, and there was also a year-on-year increase in office-based business travel.

The high levels of occupancy in hotels boosted its F&B business, as F&B sales increased by 10%, largely driven by a return to year-on-year growth in covers and spend per head.

Overall, statutory revenues in the period were up by 17% to £1.57bn, with the group noting its strong revenue performance, focus on cost efficiencies and vertically integrated business model generated “significant” cash flow.

In light of these results, its interim dividend per share increased by 40% to 34.1p per share, “reflecting the strong H1 performance and our confidence in the outlook”. 

The group said that with strong UK hotel demand, and with supply not expected to return to pre-pandemic levels for at least five years, it is now planning to grow its pipeline towards a long-term potential of 125,000 rooms across the UK and Ireland.

Dominic Paul, Whitbread CEO, said: “This is an impressive first half performance. In the UK, we maintained high levels of occupancy whilst continuing to attract excellent guest scores and offering great value for our customers. 

“The strengths of our operating model and our continued focus on driving cost efficiencies across the business resulted in UK margins exceeding pre-pandemic levels. In Germany, we are making good progress and are continuing to refine our strategy based on our learnings to-date and whilst there is much work to do as we continue to grow, we remain on course to achieve our long-term ambition of 10-14% return on capital.”   

He added: “We are generating significant operating cash flow that we are redeploying into future profit growth as well as returning value to shareholders through increased dividends and share buy-backs. Given the structural shift in hotel supply and by continuing to invest in our assets, our brand and our teams, we remain confident that we can both extend our market leading position in the UK and replicate that success in Germany. 

“The group is in excellent shape, trading well and has significant growth potential, both in the UK and Germany. Based on our strong performance to-date and an encouraging forward booked position, we remain optimistic about the full year outlook and look forward with confidence as reflected by our increased interim dividend and further planned share buy-back.”