12 January 2023
If you are covering results from Whitbread, please find below a comment from Mamta Valechha, equity research analyst at Quilter Cheviot:
"Whitbread, the operator of UK’s leading budget hotel Premier Inn, delivered another strong trading update this morning. In Q3, UK total sales were up +23% vs pre-covid levels driven by strong accommodation sales growth of +37% and better food and beverage sales growth (-4%) this may improve further as it is launching a series of initiatives to boost sales in this area.
"Sales growth in accommodation has been driven by increased occupancy, higher average room rates and estate growth, with strong performance across both London and regions.
"Premier Inn UK continued its outperformance vs the midscale and economy sector, with total accommodation sales 24 percentage points ahead in Q3, reflecting Whitbread’s scale and strong brand.
"In Germany, Premier Inn continues to see revenue growth, led by more established hotels, and the pipeline remains attractive (45 open hotels with a further 36 in the pipeline). As a reminder, Germany remains a huge opportunity as 72% of hoteliers are independents, with a low share of branded budget operators (9% vs 28% in UK), and a large domestic corporate demand market.
"On outlook, current trading remains strong in both the UK and Germany with the momentum in accommodation sales continuing (UK +36% vs. 2020). There has been no change to the cost base, with Whitbread flagging that forward bookings remain encouraging, and pricing is expected to remain strong given the supply contraction in the market as independents leave.
"We continue to favour the value end of the hotel market in the current environment, and particularly given the ongoing supply contraction of independent hotels in the UK."
