Whitbread shares booked a spot at the top of the FTSE 100’s leaderboard on Tuesday as the hotels group’s expansion into Germany builds momentum.
Growth in Germany helped offset weakness in the UK as the group’s expansion of hotel rooms in Germany was met by robust demand. UK accommodation like-for-like sales were down 2% in the first quarter while Germany steamed ahead with a 6% jump in sales.
German total sales growth was 15% and the UK was dead flat.
The group expects its German operation to break even this year as it progresses towards a target of 10–14% return on capital.
It’s fitting Whitbread released its Q1 results in the middle of the Euros football championship because the influx of fans to Germany is likely to play a part in Whitbread’s German operations achieving breakeven.
Investors were evidently pleased with the news and shares were 2.2% higher at the time of writing and the FTSE 100’s top riser.
“Following a sluggish start to the year, Premier Inn owner Whitbread has pulled things back and managed to deliver first quarter revenue just ahead the same period last. But there are some signs of softness in it’s UK hotels,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“After stripping out new room openings, UK accommodation sales were down 2%, with customers appearing to pull back on last-minute weekend breaks. Both occupancy and room rates have slipped a little, more noticeably in London. This isn’t hugely concerning though, as Whitbread is up against some very strong comparatives and continues to outperform the market. In the younger German accommodation division, growth is much stronger and remains on track to cross the break-even threshold later in the year. Euro 2024 is likely to provide something of a boost in this market too.”