If you are covering Whitbread’s latest trading update, please find below a comment from Mamta Valechha, equity research analyst at Quilter Cheviot:
“Whitbread delivered a strong set of numbers between September and November with total sales in the UK up 3%. Looking closer at the revenue figures, it was accommodation that provided that provided the bulk of the return with sales in the UK up 11%, whereas food and beverage sales were down 11% but showing signs of recovery recovering.
“The Premier Inn UK brand continues to trade ahead of the underlying midscale and economy hotels market, driven by strong leisure demand and improving business demand. More importantly, however, is that while UK accommodation sales through December and into January have slowed down due to Omicron, they are still up 5% and Premier Inn is accelerating its outperformance. However, Omicron has clearly had an impact on other parts of the business as food & beverages sales remained more challenged (-17.2%). Whitbread maintains the expectation that Premier Inn UK revenue per average room will recover to pre-covid levels in 2022.
“On cost inflation, this is expected to run at the rate of 7-8%, however, Whitbread expects to largely offset these through cost efficiencies and higher prices, suggesting its pricing power may come into good use here to combat rising inflation..
“The German market remains challenging with occupancy declining to -36.4% (vs. 59.9% in 3Q), but this is largely a function of restrictions and once these unwind we should start to see strong growth again.
“For investors, Whitbread can be viewed as a Covid recovery play and we have conviction that Premier Inn hotels will emerge from the crisis stronger and we see upside from the acceleration of the roll-out story in the UK and Germany.”
