Whitbread shares jumped on Thursday despite a slight dip in quarter-on-quarter occupancy to 84.9% as the UK’s largest hotel business’s income rose 39% above pre-pandemic levels in Q3.
Whitbread’s shares were up 3% at the time of writing on Thursday.
Whitbread’s Premier Inn achieved an 11% surge in total accommodation sales, driven by robust demand in both London and the regions.
The total revenue per available room exhibited 9% growth and an outstanding 39% increase compared to FY20, marked by high occupancy rates and robust pricing.
“But there were a few signs that Whitbread is having to work a little harder to keep its room full. Quarter-on-quarter occupancy fell over a percentage point to 84.9%. And whilst London room rates only nudged down a fraction, compared to the second quarter, they dropped by 11% in the UK regions. In Europe, expansion of the German business is continuing to plan, and Germany’s expected to hit the break-even point at some point in 2024,” said Derren Nathan, head of equity research at Hargreaves Lansdown.
Nevertheless, “Whitbread looks to be well on track to meet forecasted operating profit growth of nearly 25% in the current financial year, but going forward, the comparatives will be a lot tougher,” added Nathan.
Meanwhile, in Germany, total accommodation sales soared by an impressive 61% compared to FY23, aligning with Whitbread’s guidance of a pre-tax loss between £30 million and £40 million for FY24.
“Our teams have delivered another strong set of results,” said Dominic Paul, Chief Executive of Whitbread. “In the UK, we continued to see robust demand for our hotels, driving high levels of occupancy and strong pricing. Our focus on delivering a high-quality proposition at a great price has meant that Premier Inn UK has continued to outperform the M&E market. In Germany, we performed well in what is an important trading period with a large number of leisure and business events; we remain on course to break even on a run-rate basis during the calendar year 2024.”
“We continue to execute against our strategic priorities at pace, and given the structural shift in UK hotel supply, positive current trading, a clear commercial plan, and our ongoing focus on driving cost efficiencies, we remain confident in the outlook,” Paul added.
Looking ahead, “cost growth guidance of between 3 and 4% for next year doesn’t provide too much cause for concern and should allow some flexibility in pricing. A slowing economy may present some challenges,” said Derren Nathan.
“But Whitbread is a best-in-class operator with the financial strength to take advantage of growth opportunities while supporting dividend payments and the current share buyback plan,” he added.