Signs of continued stress across its UK hotel and restaurant units pulled Whitbread’s share price lower in Thursday trading.
At £27.15 per share, the FTSE 100 leisure giant was last 2.7% lower on the day.
Sales at the headline level fell 4% during the 13 weeks to 29 May, Whitbread said.
At its Premier Inn hotel division – which is responsible for almost three-quarters of group turnover – sales flatlined in the three month period due to enduring weakness in its home territory.
However, Whitbread continued to outperform the broader midscale and economy (M&E) accommodation market, with sales 1.7% ahead of the broader sub-sector.
Mixed Fortunes
In its core UK operation, accommodation sales reversed 1.8% in the 13 weeks on a headline basis, to £485 million. Performance was especially weak in London, where revenues per available room (RevPAR) dropped 5.5% and average room rates reversed 3%.
Occupancy dropped 2%, meanwhile, pulling total sales in the capital 2.4% lower to £117.2 million.
Outside London, RevPAR declined 1.7% and occupancy levels fell 3.5%. Though average room rates rose 2.7%, this couldn’t prevent total sales in the regions dropping 1.7% to £367.8 million.
In Germany, total accommodation revenues rose 14.9%, to £53.4 million. RevPAR and average room rates increased 10.2% and 5.7% respectively, while occupancy levels improved 2.8%.
Whitbread said that its German operation was “led by the increasing maturity of our brand and estate, together with the benefit of our commercial initiatives.”
Elsewhere, revenues across its UK restaurants tanked 16% during the quarter to £155.2 million. As with its hotels, sales across its eateries (which include the likes of Beefeater and Brewers Fayre) have disappointed due to lasting pressure on consumer spending.
This pulled food and beverage sales at group level 14% lower. Corresponding sales in Germany rose 22.1%.
Outperformance Continues
Commenting on Whitbread’s UK sales, chief executive Dominic Paul said that “we continue to outperform against a challenging market backdrop, with the strength of our brand and commercial program continuing to drive total accommodation sales and RevPAR growth ahead of the market.”
Paul added that “whilst the short-lead nature of our business means that our forward visibility remains limited, our forward booked position is ahead of last year and we remain confident that we can continue to outperform the market.”
Following what he described as “another strong performance” in Germany, Paul said that the Central European operation remains on track to move into profit this year.
He noted that “we continue to execute our strategic priorities at pace and are making excellent progress with our Accelerating Growth Plan and network expansion in both the UK and Germany.”
Under its five-year Accelerating Growth Plan, Whitbread plans to create 3,500 more hotel rooms by converting underperforming restaurant space.
Uncertain Outlook
Analyst Derren Nathan of Hargreaves Lansdown commented that the FTSE 100 company “continues to outperform the wider market, but when you’re the UK’s largest hotel brand there’s little place to hide from challenging conditions.”
He said that “while forward bookings in the UK are ahead of last year, that doesn’t provide a huge cushion if conditions don’t improve.”
However, Nathan added that “Whitbread is a quality operator that’s doing all it can to improve efficiency, and optimise its estate through initiatives such as converting low performing restaurants into additional room space.”