Premier Inn Profits, Revenue Down on Flat Bookings

Premier Inn, owned by Whitbread, experienced a dent in its profits and revenues primarily due to flat booking volumes for the 53 weeks ending February 29. The company’s underlying profit before tax saw a decline, and shares for Whitbread fell following the announcement of these results.

Premier Inn’s Financial Performance

Whitbread’s Hotels & Restaurants division reported a modest 1% increase in revenues. However, the adjusted profit before tax for the division declined by 11%. Across the entire Whitbread group, underlying profit before tax was down 8%. This performance led to a significant drop in Whitbread’s shares, falling by as much as 14%. The company cited weaker-than-expected leisure demand and ongoing inflationary pressures as contributing factors to the challenging trading environment.

Market Challenges and Strategic Response

In the UK, Premier Inn’s total accommodation sales were up by 2%. Despite this, comparable accommodation sales in its home market remained flat. The German business unit faced particular difficulties, incurring an adjusted loss of £79 million, an increase from the adjusted loss of £41 million in the prior year. This was attributed to higher operating costs in Germany.

Whitbread is actively addressing these challenges while maintaining its strategic growth plans. The company currently operates 903 hotels with a total of 84,000 rooms. It also has a pipeline of 19,000 rooms under development, indicating continued expansion. Specifically in Germany, Whitbread aims to grow its presence to 125 hotels and 20,000 rooms. To return value to shareholders, Whitbread announced a £400 million share buyback programme.

Key Points

• Reporting period: 53 weeks to February 29
• Whitbread shares fell: as much as 14%
• Whitbread underlying profit before tax: down 8%
• Hotels & Restaurants division revenues: increased 1%
• Hotels & Restaurants adjusted profit before tax: declined 11%
• UK total accommodation sales: up 2%
• UK comparable accommodation sales: flat
• German business adjusted loss: £79 million
• Prior year German business adjusted loss: £41 million
• Whitbread current hotels: 903
• Whitbread current rooms: 84,000
• Whitbread room pipeline: 19,000 rooms
• German expansion target: 125 hotels
• German expansion target: 20,000 rooms
• Share buyback programme: £400 million

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