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Solid first half for Whitbread supported by tight cost control

23 October 2018 by
Solid first half for Whitbread supported by tight cost control

Tight cost control has resulted in a "solid" first half performance for Whitbread, which is "on plan" to deliver its full-year results.

In its financial report for the six months to 30 August 2018, the Premier Inn owner reported profit before tax of £257m, just a 0.2% increase, and a revenue increase of 2.6% to £1.1b, reflecting the group's increasing capacity. By the end of August the group hit 795 hotels, up from 771 last year, with a committed pipeline of over 13,000 rooms.

Whitbread said efficiency savings, combined with the benefit of sales growth, have ensured that the impact of inflationary pressures and additional rent on operating margins have been offset.

It reported like-for-like accommodation sales growth of just 0.2%, impacted by weaker consumer demand, particularly in the regions. Food and beverage sales growth was down 2.6% due to weaker consumer demand, as well as sporting events and the hot summer months, which favoured competitors with more outdoor space and stronger drink-led offerings.

Occupancy was down slightly from 81.8% to 80.1%, as was revenue per available room, by 0.9% to £52.97. Average room rate was £66.16, an increase of 1.2%.

The report added: "Given the recent economic and political environment, along with inflationary pressures in the consumer sector, there is a degree of caution on demand. The combination of our commitment to the investment programme and the current UK consumer environment naturally means our near-term profit growth may be lower than in previous years. However, Whitbread is confident that the ongoing efficiency programme can continue to offset a significant proportion of inflation over the short to medium term."

Alison Brittain, Whitbread chief executive, said: "Although we have seen some weakness in consumer demand over the summer, we have made further encouraging progress with our efficiency programme, ensuring we remain on track with our plans for the current year."

She also confirmed shareholder approval of the sale of Costa to the Coca-Cola Company for £3.9b. She said the group intends to return a "significant majority" of the net cash proceeds to shareholders.

Following completion of the transaction, Whitbread will be a focused hotel business with more than 76,000 rooms in more than 800 hotels in the UK, Germany and the Middle East, operating under the Premier Inn brand, with a committed pipeline of almost 20,000 rooms.

Yesterday, the group also announced the trial of a new format in the UK, Zip by Premier Inn, the first of which will open in Cardiff in the first quarter of 2019.

Whitbread will also retain its 49% investment in Pure, a London-based healthy-eating quick-service restaurant business with 15 stores.

Costa Coffee sold by Whitbread to Coca Cola in £3.9b deal >>

Whitbread launches Zip by Premier Inn hotels with rooms based on airline cabins >>

Costa sales fall 2% due to tough high street trading >>

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Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

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