Whitbread has said all its employees remain on full pay before “a significant number” are placed on temporary furlough, during which time the government’s recently announced support package should cover up to 80% of their salaries.
In a trading update the group (which operates Premier Inn hotels as well as brands including Beefeater, Brewers Fayre, Table Table and Bar + Block and employs more than 35,000 people), said that although its financial performance for the year ended 27 February is expected to be in line with expectations, subsequent trading has been “materially adversely impacted” by Covid-19.
Following Government announcements, all Whitbread’s pubs and restaurants were temporarily closed from 20 March and, in light of guidance from the Prime Minister yesterday, the group is starting the process of temporarily closing its Premier Inn hotels.
It is in discussions with the Government regarding the use of some hotels near hospitals to support front-line key workers.
The group said: “Whitbread entered the year with a strong balance sheet and access to significant liquidity. There is material headroom on our funding facilities, and we will be paying all our rent payments this quarter. In addition, the business is backed by a valuable freehold property estate. However, given the unprecedented situation, we have taken a number of decisive actions to reduce cash outflows during this period.”
These include: reducing repairs and maintenance expenditure to a minimum; cancelling all non-committed development expenditure; and eliminating all discretionary spend, including room refurbishment plans, marketing, non-essential training and recruitment, and the postponement of the previously announced £25m investment.
Whitbread also said it welcomed the recently announced Government support measures for the hospitality industry, in particular, the 12-month business rates relief, which is expected to save the business approximately £120m, and the contribution to salary costs of furloughed employees.