Whitbread has announced it is set to make 6,000 redundancies in a bit to shore up cash and restructure the business following the pandemic.
It comes as market demand is expected to remain at lower levels in the short to medium-term. The Premier Inn-owner will now enter a consultation on the proposal with 6,000 hotel and restaurant employees, accounting for 18% of the total workforce.
Whitbread said it expects a “significant proportion” of the redundancies to be voluntary, adding that the restructure was a “regrettable but necessary step” to achieve a lower cost base, more flexible operating model and a “stronger, more resilient business”.
In its latest update, the hotel group noted that H1 total sales were “significantly” down by 77.2% year-on-year, reflecting the closure of the vast majority of its estate for a large part of the period.
Since reopening, however, total UK accommodation sales growth has been ahead of the market, benefitting from the “fast reopening, the strength of the Premier Inn brand and our leading customer proposition”.
Alison Brittain, CEO, said: “Our performance following the reopenings has been ahead of the market, however, it has been clear from the beginning of this crisis that even as restrictions are eased and hospitality businesses such as ours reopen their doors, that demand would be materially lower than FY20 levels for a period of time.
“Given this backdrop, we have already taken extensive action to protect the business, retain financial flexibility and position it for long-term success. We continue to work hard to ensure that we emerge from the crisis with a more flexible operating model and a stronger, more resilient business.”
She added: “With demand for travel remaining subdued, we are now having to make some very difficult decisions, and it is with great regret that today we are announcing our intention to enter into a consultation process that could result in up to 6,000 redundancies in the UK, of which it is hoped that a significant proportion can be achieved voluntarily.
“In line with our longstanding values of treating our people fairly, our priority is now to ensure that this process is clear and transparent for all colleagues and that everyone impacted is supported throughout.”