Whitbread sees strong summer demand as Q1 sales growth falls 71%
Premier Inn owner Whitbread maintained guidance despite an extension of the UK government’s lockdown, forecasting strong summer demand in coastal destinations.
The company on Thursday said first quarter like-for-like sales across its hotel and restaurant estate were down 71% compared with the same period in 2019 before the pandemic struck. In the 13 weeks to May 27, UK accommodation sales were down 60.9% while food and drink sales slumped 86% as lockdowns were enforced.
“The group traded significantly ahead of the market during the quarter, despite the impact of the government restrictions that were in place,” said chief executive Alison Brittain.
“Additionally, our forward bookings continue to improve, benefiting from the anticipated post-lockdown bounce in leisure demand, and a continued gradual improvement in business bookings. During the first quarter we opened 10 new hotels in the UK.” It also added three in Germany as it sought to cash in on the recovery.
Whitbread, which also owns restaurant brands including Beefeater and Brewers Fayre, reported encouraging trends after May 17, when overnight leisure stays were permitted.
The government had planned to lift restrictions on June 21, allowing people to gather indoors at pubs and nightclubs, but an outbreak on the so-called Delta variant of the coronavirus, which originated in India, has forced a one-month delay.
Whitbread said 98% of its hotel and restaurants were now open and forward booking trends in tourist locations over the summer were strong, except for central London and airport locations.
UK hotel sales were 73% of their pre-pandemic level between reopening and 14 June as domestic tourism boomed after months of lockdown. The company lost £1bn in the year to the end of February and last September announced up to 6,000 redundancies.
“We expect leisure demand in coastal and other tourist locations to remain very strong throughout the summer, while the full recovery of leisure demand is dependent on the final release of lockdown, and the return of unrestricted events.”
AJ Bell analyst Danni Hewson cautioned that the sunny outlook for Whitbread was dampened by the lack of demand growth in central London and airport locations, "historically key territories for the company".
"London establishments have tended to be filled by foreign tourists, UK residents on sightseeing trips to the capital, or business travellers. Air travel restrictions have cut off the natural flow of overseas guests and people staying in airport locations ready for early flights the next day."
“It certainly looks like a summer of fun for Whitbread’s earnings recovery, but challenges remain from autumn onwards. The company will have to come up with some clever marketing to encourage people to travel and fill its rooms.”