Whitbread swings to loss as it eyes up second wave
Whitbread saw its revenue slide in its first half, swinging to a loss, due to the closure of the vast majority of its business for a large part of the period.
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The FTSE 100 operator of Premier Inn said its hotels and restaurants were temporarily closed at the end of March, reopening in May in Germany, and from July and through into August in the UK.
During the period of closure, total statutory revenue was 99% behind the prior year, driving overall H1 statutory revenue down 76.9% year-on-year to £250.8m.
The significant decline in revenue resulted in an adjusted loss before tax of £367.4m, swinging from a profit of £235.6m a year earlier.
Its statutory loss before tax was £724.7m, compared to profits of £219.9m, with the loss including a non-cash impairment charge of £339.9m relating to goodwill in Germany, property, plant and equipment and right-of-use assets, as a result of impairment reviews triggered by the Covid-19 situation.
Whitbread said it retained a “strong” balance sheet and liquidity position, enhanced by the £1bn rights issue completed in June.
At the end of the first half, the business had access to £936.2m of cash and cash equivalents, an undrawn revolving credit facility of £950.0m, and up to £600m available under the Government's Covid Corporate Financing Facility (CCFF) scheme.
On the operational front, Whitbread said it reopened its hotels “quickly and safely” where permitted, with 97% of its UK hotels open by the end of July.
Since reopening, UK accommodation sales performance was ahead of the market, benefitting from the fast reopening, the strength of the Premier Inn brand and the company’s customer proposition, the board said.
UK occupancy levels steadily improved on a weekly basis, averaging 51% in August, while UK restaurant performance was boosted by the positive impact of the ‘Eat Out to Help Out’ scheme.
August UK total sales improved to 38.5% down year-on-year
Whitbread said customer scores remained “very strong” during the first half, despite the significant disruption.
In Germany, the company grew its open hotel network from six to 19 hotels by the end of the half, and by a further two in October to take the total to 21 open hotels as of Tuesday.
“Our performance following the reopening of our hotels and restaurants in the summer was encouraging and we continue to trade ahead of the market,” said chief executive officer Alison Brittain.
“Taking market share in the UK demonstrates the strength of our trusted Premier Inn brand and the benefits of our unique operating model.
“Throughout the crisis we have taken decisive action and we continue to focus on protecting our guests, our teams and our business in light of the impact of the recent increase in regional and national restrictions.”
Brittain said the company was also improving the flexibility of its cost model to respond to changes in demand, and ss a result, it was entering the current second-wave period in a position of strength, with its customer scores reportedly higher than ever, its market share growing in the UK and extending a meaningful network of hotels in Germany.
“Whitbread's long-term strategy remains as relevant and compelling as ever. The impact of the Covid-19 pandemic on the hotel sector will undoubtedly be significant and we are already seeing signs of distress and constraint in the competitive landscape.
“This is likely to accelerate the structural changes in the market with supply contraction and constrained investment amongst independent and budget branded operators in both the UK and Germany.”
At 0810 GMT, shares in Whitbread were up 1.69% at 2,282p.