Premier Inn Owner Whitbread Reports Sales Growth Amid Cost-Saving Measures

Whitbread, the owner of Premier Inn, announced a rise in group sales and indicated that forward bookings remain strong, despite implementing cost-saving measures including planned job cuts and restaurant conversions. The company's hotel business continues to outperform the broader market.

In the 13 weeks leading up to May 28, Premier Inn UK experienced a 3% increase in total accommodation sales compared to the previous year, with revenue per available room (RevPAR) rising by 2%. The company stated that its hotels are outperforming the midscale and economy market, with total accommodation sales growing by 1%. Trading was particularly robust in London, where accommodation sales saw a 7% jump and RevPAR increased by 4%, while regional performance showed a 1% increase in both metrics.

Chief executive Dominic Paul attributed the strong performance in the UK to the strength of the brand and commercial programs. "We delivered a strong and improved performance in the first quarter," Paul stated. "In the UK, driven by the strength of our brand and commercial programme, total accommodation sales and RevPAR continued to grow ahead of the wider market."

Despite the positive sales figures, Whitbread is proceeding with a strategy outlined in April to achieve £250 million in cost savings over five years. This plan involves cutting approximately 3,800 jobs, overhauling its restaurant brands, and selling some of its hotels. These measures follow a review initiated after significant increases in business rates for hotels.

Whitbread's total group sales for the quarter reached £727 million, a 2% increase. This growth was driven by positive trading across Premier Inn UK and Premier Inn Germany, partially offset by an anticipated reduction in its UK food and beverage operations. As part of its strategic adjustments, Whitbread plans to convert 87 Beefeater and Brewers Fayre restaurants into Premier Inn hotel rooms and sell 110 of these sites over the next two years.

During the first quarter, food and drink sales decreased by 5% to £148 million, while accommodation revenue increased by 3% to £498 million. RevPAR across the group's UK accommodation arm rose by 2%.

Paul expressed confidence in the company's outlook, noting that forward bookings in both the UK and Germany are ahead of last year, supported by strong leisure demand. Analysts have viewed the company's performance positively, with one analyst from Hargreaves Lansdown commenting that Whitbread continues to outperform the market and that the planned scaling back of its food and beverage operations should further clarify its financial performance. The analyst also pointed to strong bookings and easing geopolitical tensions as favorable factors for the company's future prospects. Shares in Whitbread saw a slight decrease of 0.33% on Thursday morning.