Premier Inn owner to axe 1,500 roles as part of growth plan

Premier Inn owner Whitbread is set to axe 1,500 roles from the business, as it plans to close over 200 branded restaurants and instead expand its hotel business by building more rooms across the group.

The move forms part of a growth plan that will see it convert 112 lower-returning branded restaurants into new hotel rooms, and offload a further 126 restaurants. The group has already agreed to sell 21 of these restaurants for £28m.

In addition, Whitbread said it plans to unlock 3,500 new room extensions that will see it reach at least 97,000 open rooms in the UK by the end of FY29.

According to Whitbread, the plan will at first result in a £20m – £25m reduction to UK adjusted PBT in FY25, which will be “fully recovered” in FY26 and deliver incremental adjusted PBT of £30m – £40m in FY27. By FY29, the plan should deliver increased adjusted PBT of £80m – £90m.

Regarding the job losses, the group said it would “seek to find alternative opportunities wherever possible” through the roles created by the plan.

The announcement was made alongside its full-year results, as the group reported adjusted profit before tax of £561m, up by 36% against the prior year. Meanwhile, revenues rose by 13% to £2.96bn in the year ended 29 February 2024.

Across Premier Inn UK, total accommodation sales were up 12%, and RevPAR was up 10%, with total accommodation sales 3.1% and RevPAR £5.95 ahead of the M&E market.

Its board also recommended a 26% increase in its final dividend per share to 62.9p, and intends to launch a further £150m share buy-back.

CEO Dominic Paul said: “We have delivered an outstanding set of results in FY24, led by the strength of our UK hotels business. Our increased levels of profitability, operating cashflow and return on capital reflect the power of our unique operating model. Our freehold-backed balance sheet, together with our strategy of continuing to invest, is allowing us to take advantage of the significant structural growth opportunity that exists following the decline in UK hotel supply.

“Against this backdrop, we are increasing our momentum to deliver long-term profitable growth. In addition to our strong commercial programme, we plan to optimise our F&B offer at a number of our sites to unlock up to 3,500 room extensions that will enhance the service for our hotel guests and deliver increased operational efficiencies.”

He added: “We recognise that our transition will impact some of our team members so we will be providing support throughout this process and we are committed to working hard to enable as many as possible of those affected to remain with us. The short-term impact on our profit performance this year will be more than offset by an uplift from FY27 with further increases thereafter in both margins and returns as we open more of the new extensions.”