Whitbread beats expectations but warns of ‘tight’ labour market
The announcement comes as Whitbread’s trading was ahead of expectations, with UK food and beverage sales surging 585.3% year-on-year
Whitbread has revealed that it expects to increase its total costs by £20m – £30m in FY23 due to targeted pay increases and the labour supply remaining “tight” across the hospitality sector.
The Premier Inn operator will also bring forward its investment in refurbishments and maintenance projects, as well as accelerate some additional IT spend in a bid to drive future earnings.
The announcement comes as Whitbread’s trading was ahead of expectations in the UK and Germany in Q1, with total food and beverage sales having recovered throughout FY22 and into FY23, approaching pre-Covid levels in FY20.
All in all, UK food and beverage sales surged 585.3% year-on-year, although this is 4.3% down from FY20. Whitbread said it anticipates that the rollout of new menus, combined with targeted marketing initiatives, will help drive an improvement in sales through the year.
The company added that it has continued market outperformance in the UK with Premier Inn total accommodation sales 27.2pp ahead of the market. Overall, UK hotels continued to perform ahead of pre-Covid levels as accommodation sales increased 235.6% year-on-year, while like-for-like sales rose 221.6% from FY22.
Whitbread said that it remains confident in its continued margin recovery in the UK due to high levels of occupancy and continued sales performance.
Meanwhile, the business has signed a new £775m revolving credit facility (RCF), replacing the previous £850m facility that was due to expire in September 2023.
Alison Brittain, Whitbread chief executive officer, said: “The strength of Premier Inn’s recovery in the UK continues to be ahead of expectations with a particularly strong Q1 performance that is well ahead of pre-pandemic levels and we continue to significantly outperform the market.
“This outperformance is driven by a number of factors, including our commercial and operational focus as well as the strength of our brand and operating model, our direct distribution, national coverage and accelerated independent supply contraction.”
She added: “This impressive Q1 performance together with improved visibility into Q2, gives us increased confidence in delivering a strong first half and remaining ahead of the market for the rest of the year.”