Shares at British hoteliers Whitbread plc (LON:WTB) have bounced more than 3% after the company released its Q3 FY2021 trading update, citing “resilient operational performance” despite sales down 66.4% and occupancy at a mere 31.1% for the 5 weeks leading up to 31 December 2020.
The company behind Premier Inn lamented the “very challenging hotel market conditions” as a result of the UK government’s lockdown restrictions – reimposed in November and late December as well as again at the beginning of January 2021 – which resulted in a steep fall in demand.
However, Whitbread noted an “improved demand” for business and some leisure travel which enabled the majority of its UK hotels to remain open during the first half of December, and noted that around two-thirds of its hotels are still currently open (although all its restaurants are closed according to lockdown restrictions).
Occupancy levels at Premier Inn sites reached 58% in September – driven by “relatively strong leisure demand in tourist locations and business demand recovering from a very low base” – but plummeted to just 35% in November on the announcement of a second national lockdown. Demand remained stronger in the regions throughout the quarter, however, with demand in metropolitan areas – and London in particular – remaining “weak”.
On average, 82% of Whitbread’s restaurants were open during the quarter, but total food and beverage sales were 53.9% lower year-on-year, as a result of both national lockdowns and tier restrictions forcing restaurants closures and limiting takeaway capacity.
The company went ahead with completing the restructure of its hotel and restaurant operations teams over Q3, which resulted in around 1,500 staff losing their jobs, although Whitbread notes that this is “less than the maximum number of redundancies previously indicated (6,000)”. However, targeted cost savings were still achieved as a result of “a greater proportion of colleagues accepting a reduction in maximum contracted hours”.
The Group’s balance sheet remains “strong” with a net cash position at 31 December 2020 of approximately £40m – compared to £196.4m at the end of H1 – while capital spend was £98.4m in the four months up to 31 December 2020. It also had cash on deposit of £814.9m and access to a £900m undrawn revolving credit facility, as well as up to £300m available as part of the government’s Covid Corporate Financing Facility (CCFF) scheme.
Total UK sales across its hotels are currently down -73.4%.
Commenting on Whitbread’s update, CEO Alison Brittain said:
“Since the start of the COVID crisis, we have responded quickly and robustly to the changing restrictions and have learnt to rapidly adapt our operations as required. This is testament to the efforts of our colleagues who continue to work tirelessly to maintain our very high operating standards, customer service and high levels of health and safety. This response has enabled us to continue to deliver strong market share gains in the UK, demonstrating the benefits of our strong brand, direct distribution, and our unique operating model.
“We expect the current travel restrictions in the UK and Germany to remain until at the very least the end of our financial year. With the vaccination programme underway, we look forward to the potential gradual relaxation of restrictions from the Spring, business and leisure confidence returning, and our market recovering over the rest of the year.
“We continue to protect our liquidity through the careful management of our cash position, and to take actions to ensure that we exit the crisis as a leaner, stronger and more resilient business. Our strong balance sheet also provides the opportunity to take full advantage of the enhanced structural opportunities that we are already seeing in the market”.
Whitbread shares were up 3.89% to 3,179.00p at GMT 10:13 on Wednesday as shareholders likely expected the company’s results to emerge worse. The stock has slipped -24.38% over the past 12 months.
