On Wednesday, leisure company Whitbread posted a 44% rise in first half-year profit and was the best performer out of the FTSE 100 at the time of writing.
Much of Whitbread’s increased profit was a result of strong consumer spending at Whitbread’s Premier Inn hotels and restaurants.
Whitbread’s overall revenue is up 17% to £1.6bn as its underlying pre-tax profit grew to 44% to £391m.
Furthermore, Whitbread stated a plan for a £300 million share buyback and a proposed interim dividend of 34.1p per share.
Whitbread CEO Dominic Paul said in a comment that post-pandemic steady demand for Premier Inn hotels and restaurants has been driving Primer sales up, stating that forward-booked revenue is ahead of last year.
According to Whitbread, 86% of their hotel customers were repeat visitors.
Overall, Whitbread’s increased investment focus led to the 2024 capex guidance being upped to £500–£550 million.
Derren Nathan, head of equity research at Hargreaves Lansdown, said in a comment that “the Premier Inn owner and the UK’s largest hotel chain have plenty of reasons to be cheerful. Strong demand from both business and leisure guests across regions and London drove accommodation sales up by 13%. This, coupled with a focus on cost efficiencies, saw the bottom line come in ahead of management expectations.”
“In the UK, supply is not expected to get back to pre-pandemic levels for at least five years, so there’s space for selective site expansion without crushing margins. And with net cash on the balance sheet, there’s also room to return cash to investors. The much smaller German operation is tantalisingly close to profitability, and the current pipeline should see the footprint in Germany expand by 6,000 rooms.”
“The outlook for consumers is likely to get more challenging. But for now, the mid-teens earnings rating doesn’t look too demanding, and momentum has carried over into the first six weeks of the second half in both the UK and Germany”, he added.
