Whitbread, the leisure group behind Premier Inn, suffered from a sharp deterioration in business travel due to Brexit and fears of a downturn leading to a decline in like-for-like accommodation sales that was worse than the rest of the market.
The hotel company said on Wednesday that in the three months up to the end of May 2019, sales of rooms declined 4.6 per cent in its core UK market, compared to a decline of 0.1 per cent for the UK’s economy hotel sector as a whole.
Like-for-like revenue per available room, an industry sales metric, was also down 6 per cent, compared to a marketwide decline of 3.4 per cent in the same period.
Whitbread, which has more than 78,000 rooms across its Premier Inn hotels, is instead looking to Germany for hopes of growth, an expansion plan that it said was “firmly on target”.
It opened its second hotel in Germany in Hamburg in February and aims to have 20 hotels open in the country by 2020. It estimates that the German market is around 30 per cent bigger than UK’s and is growing at 4 per cent per year.
In February Whitbread bought a portfolio of 19 hotels in Germany from the local hotel developer Foremost Hospitality. It said that it aimed to open a first tranche of 13 of these hotels as rebranded Premier Inns in the first half of next year.
Alison Brittain, chief executive, said that the company had delivered a “resilient performance”.
She added: “Whilst we are cautious about short-term market conditions, we are confident in our plans given the significant growth opportunities in the UK and internationally.”
Richard Clark, an analyst at Bernstein, noted that Whitbread had underperformed on revenue per available room in the UK for three consecutive years and that it was unlikely that it would pick up further business from the demise of regional independent hotels when a downturn came. “The low hanging fruit was picked in 2009 and Airbnb/OYO are other potential winners,” he said.
Since its sale of Costa Coffee to Coca-Cola for £3.9bn, Whitbread has been in the process of returning cash to shareholders. It completed a £482m share buyback in May, and announced a further £2bn tender offer that is subject to approval at the annual general meeting to be held on Wednesday.
