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A slowdown in the London hotels market hit profits at FTSE 100 leisure group Whitbread, which missed full-year profit forecasts despite meeting sales targets.
Revenues in the year to March 2 increased 6.3 per cent compared with the previous year, to £3.1bn, in line with analyst forecasts. Growth figures for the year were skewed by a longer trading period in the prior period, and sales growth was higher at 8.2 per cent when compared on a 52-week basis.
However, profits grew more slowly, up by 5.7 per cent to £515.4m, compared to a consensus estimate of £543m among analysts surveyed by FactSet.
The company’s businesses have been under pressure from increasing competition, particularly from individuals renting rooms out through Airbnb. Its Costa chain has been forced to fight back against the rise of artisan cafés, and the company said today it was also facing pressure from the growing number of restaurants beginning to offer coffee options.
Whitbread said “the market and competitive landscape continue to evolve with more food-led operators now offering coffee and, while convenience and coffee quality remain the top decision criteria, customers are becoming more demanding in the way their priorities are met”.
While Costa showed signs of a return to like for like improvements after years of slowing growth, growth at Whitbread’s Premier Inn hotel chain was weaker. Total revenues increased by 8.9 per cent, but was driven by the opening of new hotels and rooms. Revenue per available room, the hotel industry’s preferred performance measure, fell by 0.6 per cent over the year, driven by a 3.3 per cent decline in London.
Whitbread said its new financial year had started relatively well, but remained cautious about the year ahead, noting that it “expect[s] a tougher consumer environment than last year”.
Alison Brittain, Whitbread chief executive, said:
We made good progress in delivering on our three strategic priorities: to grow and innovate in our core UK businesses; to focus on our strengths to grow internationally; and to build the capability and infrastructure to support long-term growth.