22nd Jun 2023 10:06
(Alliance News) - Whitbread PLC's first-quarter update was "reassuring", with a tourist influx during coronation weekend in the UK, and a burgeoning reputation for Premier Inn boosting the hotel company's fortunes.
The company reported revenue in the first three months of the year ending March 31, 2024 rose 19% annually.
This was attributed to solid trading momentum in both the UK and Germany. UK sales grew by 16%, with Whitbread noting strong consumer demand and the opening of 248 new rooms across its facilities in the UK and Ireland.
It hailed "strong demand from both business and leisure guests across the regions and London".
Edison analyst Neil Shah commented: "Whitbread, the owner of the Premier Inn hotel group, has reported a significant uptick in sales, a promising sign of recovery bolstered by the influx of tourists visiting London for the King’s Coronation. The boost in tourist activity helped the hotel group achieve an 18% increase in sales, demonstrating a robust start to the year.
"The shift in the travel and leisure behaviour of Britons post-pandemic seems to have positively influenced the performance of Whitbread's portfolio of 800 hotels. A notable driver of this growth was the exceptional demand in London, likely fuelled by the city's coronation festivities in May. As a result, occupancy across Whitbread's London-based properties soared by 81.2%, a substantial rise from the previous term's 76.8%."
Meanwhile, in Germany, sales more than doubled as a recovery in market demand continued during the period.
Looking ahead, Whitbread said trading momentum has continued into the second quarter, and it expects to open a total of 1,500 to 2,000 new rooms by the end of the financial year. The company remain confident in the full year outlook and said forward booked revenue in the UK is "well ahead of last year".
Helping Whitbread is a growing reputation for Premier Inn among business travellers, AJ Bell analyst Russ Mould noted, in contrast to Travelodge.
"Premier Inn has managed to distance itself from Travelodge and other budget chains in terms of how it is perceived by people needing accommodation. In particular, business customers seem happy to stay at one of its hotels, including those forced by their employer to seek a cheaper option," Mould explained.
"Travelodge is up for sale with a rumoured GBP1.2 billion price tag – getting anywhere close to that amount could put the spotlight on Whitbread and whether Premier Inn sites are currently undervalued."
All-in-all, UBS said Whitbread's update was "reassuring", though the Swiss bank noted the stock has been "strong", suggesting it may face some selling pressure on Thursday.
Whitbread shares fell 2.2% to 3,317.00 pence each in London on Thursday morning. It is up around 24% year-to-date, however.
By Eric Cunha, Alliance News news editor
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