June 17, 2014 9:09 am

Whitbread buoyed by economic recovery

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Costa Coffee Ahead Of Earnings©Bloomberg

Whitbread has profited from jobs growth in the UK regions, enjoying a 6.9 per cent increase in first-quarter sales.

The operator of the Premier Inn budget hotel chain delivered nearly 10 per cent like-for-like sales growth in the 13 weeks to the end of May, the company said in a trading update on Tuesday.

The brand, which competes with Travelodge in the economy hotel market, saw occupancy rates rise 4.2 per cent to top 80 per cent. It is expanding rapidly, with 43 hotels under construction across the UK.

Andy Harrison, Whitbread chief executive, said that while individual disposable income remained under pressure, employment, business confidence and the housing market were buoyant.

“There is a higher level of economic activity,” Mr Harrison said. “There are more people in employment and business confidence seems to have gone up.”

Revenue per available rooms, the hotel industry benchmark, grew 9 per cent in the quarter, following an 8 per cent rise in September to February, he added.

“We can see that’s more of a trend than a blip. We can expect the London and UK regions’ hotel markets to continue to grow,” said Mr Harrison.

Premier Inn’s total London sales rose 10.4 per cent, and the number of rooms it had available rose 7.6 per cent, as part of Whitbread’s focus on rapidly expanding its London market.

Its first “hub by Premier Inn” hotel is due to open in London’s West End later this year, offering compact but centrally located rooms with high-quality fixtures and fittings, aimed at business travellers.

People travelling for work make up 60 per cent of Premier Inn’s customers.

Other parts of the Whitbread group saw lower but still positive sales growth.

Its Costa Coffee shop chain posted 4.5 per cent like-for-like sales growth, and sales in the restaurants division – which includes family-oriented brands such as Beefeater Grill and Brewers Fayre – grew 4.4 per cent.

Costa aims to open about 300 outlets this year.

Whitbread has, however, closed 55 Costa stores, 39 of which were abroad, as it continues to focus its international operations on profit-generating outlets.

Whitbread is “well-positioned for another good year with our strong brands continuing to win market share, reinforced by ambitious organic network expansion”, Mr Harrison said.

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