UK: Whitbread cuts pace of Premier Inn expansion despite “strong’ third quarter

Whitbread is to open 500 fewer new Premier Inn rooms this year than previously planned.

Whitbread is to open 500 fewer new Premier Inn rooms this year than previously planned. - Credit: Vismedia

Premier Inn owner Whitbread put the brakes on its expansion of the budget hotel chain today as it announced it would open 500 fewer rooms than expected in the current financial year.

Like-for-like sales at Premier grew by 5.4% in the third quarter to November 28 while Whitbread’s performance also continued to be boosted by the success of its Costa coffee chain, where sales were up 4.9%.

Whibread’s Beefeater and Brewers Fayre restaurants also improved like-for-like sales, by 1.8%, although the group warned that the sector continued to be challenging, especially outside London.

The group added that it now planned to open 3,500 new hotel rooms in the current financial year, down from 4,000 previously. The revised total is partly due to a delay in opening a new central London Premier Inn, but the group’s guidance for the following year has not been increased.

Premier Inn has opened 22 new hotels so far in the year, including two abroad, while Costa has added a net 246 stores including 133 in the UK and 54 in China, bringing the total number to 2,773.

Total sales at the coffee chain for the first three quarters were £882mmillion, up nearly a fifth on last year, although trading in central and southern Europe remained tough.

Whitbread chief executive Andy Harrison said it had been “another strong quarter” for the group and that it remained on track to deliver full-year results in line with expectations.

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However, Whitbread’s shares, which have climbed about 50% in the last year, come under pressure today, and Panmure Gordon analyst Simon French said they looked too expensive given the challenges faced by the group.