Whitbread shares were nicely higher on Wednesday after the hotel and leisure group posted interim results revealing robust demand in Germany but a slightly less positive performance in the UK.
The driving factor for shares on Wednesday was a fresh £100m share buy back and 7% increase in the interim dividend. The group also set out a plan to return £2bn shareholders over the next five years.
Group revenue for the period was flat, largely as a result of soft market conditions in the UK. However, outperformance of the wider market seems to have provided some encouragement for investors as shares rose 3%.
“Premier Inn operator Whitbread continues to outperform the market but that’s not quite enough to shrug off a weaker demand picture. In the UK, both occupancy and room rates were down on last year, with London feeling the pinch a little more than the regions,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“Overall, revenue per available room (RevPAR) fell 4% to £72. This was offset by continued expansion in the estate. Food and Beverage sales fell 7% reflecting both a 3% decrease in like-for-like sales and planned consolidation of the estate towards a more hotel-based dining offering.”
Analysts highlight how less competition after the pandemic has provided a boost to Whitbread as they cement their market leading position.
“There is no doubt just how much the pandemic hurt Whitbread. As COVID-19 tore through the hospitality sector, hotels and hospitality outlets were forced to adapt in a bid to survive. However, as is often the case in times of crisis, there comes opportunity,” said Mark Crouch, market analyst at investment platform eToro.
“Following the pandemic, Whitbread’s competition has significantly thinned out, allowing the Premier Inn owner to consolidate its position as the UK’s leading hotel chain and further bolster its standing in Germany, where total accommodation sales grew by 22% in the first half of the year.”