Whitbread paying higher wages, bonuses to keep staff as losses narrow

Premier Inn owner Whitbread said interim losses narrowed as sales rebounded, with room revenues potentially hitting full recovery next year and added it was paying higher wages and a retention bonus to combat labour shortages.

Pre-tax losses for the six months to September 30 came in at £19.3m, compared to year-on-year losses of £724.7m. On a two-year pre-pandemic basis, the loss compared with a £220m profit.

Revenue more than doubled to £661.6m, but was still 39% below the £1.08bn for the two-year period.

Whitbread said total UK sales in the seven weeks to October 14 were 1.3% ahead of the same period two years ago, with total accommodation sales 7.9% ahead and occupancy at 81.2%.

It added that it was spending £10m on a one-off summer staff retention bonus for staff to in response to hospitality wide-labour shortages.

The company said a "material number of vacancies still remain unfilled" and filling them "may well take time".

"We have therefore invested in our pay rates to remain competitive, at an additional cost of £12m-13m in full-year 2022. The group will also pay £10m as a one-off summer retention bonus for hotel and restaurant staff in (the second half) and we will continue to monitor the market to ensure our pay rates remain competitive," it said in a statement.

Total UK accommodation sales were 14.1% ahead of the market and food and beverage sales 11.5% lower on the same pore-pandemic period. The company said it was starting to see demand momentum "moving in the right direction", especially within the UK regions, as it entered the quieter lower demand months of the year.

“Whitbread traded significantly ahead of the market in the UK during the first half of the year, with our regional hotels trading ahead of pre-COVID-19 levels in the last six weeks of the half,” said chief executive Alison Brittain.

“This strong performance has continued into the second half, with sustained high levels of leisure demand and resilient demand from tradespeople.”

“The operating environment during the summer and into autumn has been challenging largely as a result of our very high occupancy levels, market-wide supply chain issues and a tighter labour supply in the hospitality sector,” she said.

AJ Bell investment director Russ Mould said wage inflation was "the main black mark in an otherwise encouraging set of first half results".

"Some kind of rebound from the previous Covid-impacted performance was inevitable but what is more telling is that the company is recovering ahead of the wider market," he said.

“This suggests the Premier Inn brand is resonating with domestic leisure travellers and that the company is taking market share. The exit of weaker peers from the market and constrained investment at some of its rivals should further bolster Whitbread’s position."