Whitbread sales slump as Covid-19 lockdown hits Premier Inn

UK first quarter like-for-like sales slumped at Premier Inn owner Whitbread, reflecting the full impact of the coronavirus lockdown although it reported good summer demand for tourist destinations.

Like-for-like sales for the three months to May 28 fell 79.8% across Whitbread’s British hotel and pub estate, while total group sales fell 79.4%.

“It is still very early days and therefore too early to draw any conclusions from our booking trajectory, especially as there has been volatility in hotel performance in other countries that relaxed controls before the UK,” said chief executive Alison Brittain.

“However, in traditional regional tourist destinations, we are seeing good demand for the summer months, whilst the rest of the regions and metropolitan areas, including London, remain subdued.”

The company added that it had used the experience of accommodating key workers during the lockdown to refine its social distancing measures once restrictions were eased.

The company said it now had more than 270 hotels and 24 restaurants reopened in the UK with, while in Germany all 19 of its hotels were open. Whitbread in June raised £1bn to bolster its balance sheet and fund opportunistic purchases of land for new hotels on the cheap in the coming recessions in the UK and Germany.

"Our strong balance sheet, alongside both our leading operating model and the power of our brands, means that we are in the best possible position to take advantage of enhanced structural opportunities that we expect to become available in both the UK and Germany," Brittain said

Hargreaves Lansdown analyst Emilie Stevens said Premier Inn could benefit as Britons chose "staycations" over foreign holidays "which is good news for Whitbread’s regional locations".

"Unfortunately, while higher levels of domestic tourism is good news, particularly if it’s a trend that holds, it’s no substitute for international and businesses travellers visiting the UK’s major cities. For now though it’s a welcome break in an unfriendly market environment."

Analysts at online trader IG said described the announcement as "very much in the ‘things are bad now, but will hopefully get better’ category providing little meat for investors to sink their teeth into".

"The shares have failed to gain much traction of late, surrendering almost all the gains from the second half of March, at a time when many other names have continued to enjoy healthy rallies. Whitbread, so long a darling of the UK market, is firmly out of favour, and remains definitively in the ‘cheap for a reason’ basket," said IG's Chris Beauchamp.