Woes aid Whitbread
Whitbread, Britain’s biggest hotel and restaurants operator, yesterday emerged as a rare winner in the consumer slowdown, revealing a boost in sales in the first half of this year.
Whitbread’s Premier Inn budget hotel chain accounts for about 70 per cent of total profits.
Premier Inn had total sales up 17.9 per cent and like-for-like sales up 10.2 per cent, benefiting from business travellers looking to save money. Whitbread has opened 14 new Premier Inns this year, taking it up to 40,000 rooms in 570 hotels in Britain.
The company reported group like-for-like sales growth of seven per cent in the 24 weeks to 14 August.
Chief executive Alan Parker attributed the strong sales growth to: “concentrating on value for money, ditching companies with a low growth potential for those more fleet of foot and turning it from something like a Thames sailing barge into a racing yacht.”
Whitbread said it had responded to food and energy inflation by improving operating efficiencies and putting lower-cost options on the menus throughout its pub’s restaurant business, which incorporates Brewers Fayre, Table Table and Beefeater, increasing like-for-like sales by 4.4 per cent. The Costa Coffee chain, which contributes 10 per cent of Whitbread’s profits, increased like-for-like sales by 3.7 per cent.
Analysts Views: What do you think of Whitbread’s update?
John Beaumont (Kaupthing): “The trading update demonstrates good resilience of its businesses. It continues to show growth in its two biggest operations. The performance of its pub/restaurant division looks exceptionally good versus all of the negative like for like sales we are seeing from its peers.”
Matthew Gerard (Investsec): “An impressive first quarter performance has been maintained into the second quarter. The turnaround in pub restaurants is gathering pace. With a strong balance sheet, good structural growth prospects, high barriers to entry and conservative estimates, Whitbread remains one of our key sector picks.”
Nigel Pearson (Evolution): “Excellent. The real value within Whitbread is the roll-out story. There’s five years of UK budget hotel growth which gives it time to build out from the international bridgeheads in India and the Gulf. Whitbread is not immune to a consumer slowdown but budget hotels are at the defensive end of the spectrum.”