Whitbread grows again in 2016/17 but warns of tougher outlook

25 April 2017 by
Whitbread grows again in 2016/17 but warns of tougher outlook

Hospitality giant Whitbread, which owns the Premier Inn and Costa coffee brands, has recorded an 8.2% rise in revenue for 2016/17, taking it past the £3b mark.

Revenue for the 52 weeks to 2 March 2017 stood at £3.1b, against £2.9b for the 53 weeks to 3 March 2016. On a 52-week comparative basis, that represented an increase of 8.2%

Underlying profit before tax rose 6.2% to £565.2m on a 52-week comparative.

Premier Inn saw total sales growth of 9% and like-for-like sales up 2.3%, while Costa's total sales growth was 10.7%, with system sales up 12.7%.

Chief executive Alison Brittain (pictured) said: "In 2016/17 we made good progress in delivering on our three strategic priorities: to grow and innovate in our core UK businesses; to focus on our strengths to grow internationally; and to build the capability and infrastructure to support long-term growth.

"Premier Inn's strong sales growth benefited from the 3,816 gross new UK rooms we opened this year and the accelerated maturity of the c.9,000 rooms we have opened over the last two years. We delivered high customer satisfaction by leading the market on quality and value, and achieved occupancy of over 80% with record levels of direct bookings at 94%, all of which supported our strong return on capital."

The business said that it saw London as an opportunity for its hotel brand. Although it has more than 68,000 rooms in the UK and lays claim to being the UK's biggest hotel brand, Premier Inn's share of the London market is around 8%. Over the last three years, Whitbread said it had increased its rooms available in the city by 49.4%, compared with 12.5% for the midscale and economy markets, and grown accommodation sales by 43.7% compared with 21.4% respectively as it continued to win market share.

Premier Inn's London hotels reach occupancy of around 80% in their first year. Meanwhile, the company has been developing its compact city centre hub by Premier Inn brand, which has allowed it access to profitable city centre locations with high property costs. It now has four hub hotels open in London and one in Edinburgh, with a committed pipeline of 11 hotels over the next three years.

Speaking about Costa, Brittain added: "Costa opened 255 net new stores worldwide and we continue to roll out our successful and fast growing Costa travel formats. Costa Express had a great year installing over 1,500 machines, of which 248 were in international markets. We are innovating to drive our sales growth and are pleased with the investment we are making to introduce ‘finer' coffee concepts, leveraging our new state of the art roastery and delivering fresher food that our customers will enjoy later this year."

In Germany, the business has grown its hotel pipeline to five hotels. Whitbread also said that its joint venture in the Middle East continue to have success, while a phased withdrawal from South East Asia was "on plan".

Brittain added that China, where the company has launched five concept stores, remained an "exciting platform" of growth for Costa.

But she did sound a note of caution for the year ahead, saying: "Whilst we are only seven weeks into our new financial year, Premier Inn has had a good start to the year and Costa has also seen positive like-for-like sales growth, although we remain cautious and expect a tougher consumer environment than last year."

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