Whitbread scraps dividend; Shuts Premier Inns in UK, Germany
UK hotel operator Whitbread scrapped its dividend and said it would shut temporarily all Premier Inn hotels in the UK and Germany due to the Covid-19 pandemic, which may amount to a “technical default” under its banking arrangements.
The owner of the Beefeater chain said it had already closed its pubs and restaurants last week in line with government guidance. On Monday Prime Minister Boris Johnson ordered a lockdown across Britain, including the closure of non-essential businesses, to help contain the coronavirus from spreading.
“The situation is rapidly changing and at this point it is not possible to predict the full extent of the market down-turn and the impact on the business's revenues,” Whitbread said in a statement on Tuesday, adding that it had “material headroom” funding facilities and would be honouring rent payments this quarter.
It also said it was working with lenders to seek waivers "wherever this is required or prudent" to avoid any defaults.
A significant number of site teams had been placed on a temporary furlough, with all employees on full pay, Whitbread said, adding the it expected the recently announced government wage bailout to pay up to 80% of their salaries.
Support measures for the hospitality industry were expected to save the business around £120m in fiscal year 2021, which would have a positive impact on cashflow.
Whitbread added it was in talks with the government on the use of some hotels near hospitals, to support front-line key workers.