Interactive Investor

ii view: investors check-in at Premier Inn owner Whitbread

12th January 2023 11:04

Keith Bowman from interactive investor

Shares in this budget hotelier have rallied over 10% in 2023 so far. We assess prospects. 

Third-quarter trading update to 1 December

  • Total UK accommodation sales up 24% year-over-year
  • Food and Beverage sales down 8% 

Chief executive Alison Brittain said:

“Premier Inn UK delivered another excellent quarter with a strong performance, both in absolute terms and also relative to the broader midscale and economy sector. Despite a more challenging period for the UK economy, our winning business model continues to deliver outstanding value and quality for our guests.”

ii round-up:

Premier inn owner Whitbread (LSE:WTB) today detailed a near one-quarter increase in total UK accommodation sales as restrictions from the pandemic were lifted and its total number of rooms continued to increase. 

UK accommodation sales compared to the same quarter prior to the pandemic gained by more than a third, while Food and Beverage (F&B) sales remained down by 4%, although better than analysts had feared. 

Whitbread shares rose by more than 4% in UK trading having come into this latest announcement down by 9% over the last year. Shares in fellow FTSE 100 global hotelier InterContinental Hotels Group (LSE:IHG) are up by around 7% over that time, while budget pub chain Wetherspoon (J D) (LSE:JDW) has almost halved.

Along with its Premier Inn outlets, Whitbread also operates a series of value pub chains such as Beefeater and Table Table, often to the side of its inns, as well as an expanding number of Premium Inns in Germany. 

Cost rises for the current full year on its £1.6 billion cost base are expected to remain in line with its previous estimate of 10% to 11%, although are expected to moderate to up 7% to 8% for the year ahead. Headwinds have included wages and utility bills. 

Losses for its fledgling German business are expected to stay in line with its previously improved estimate of £40-£50 million. Whitbread has now opened 45 open hotels in Germany with a further 36 in the pipeline. 

Accompanying management outlook comments pointed to continued strong trading momentum, with total UK accommodation sales remaining up by a quarter compared to the same time last year. 

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares following the update. 

ii view:

Whitbread employs over 35,000 people in more than 1,600 Premier Inn hotels and restaurants across the UK. It generates around 70% of its sales from accommodation with the balance coming from food and beverage sales. Most of its revenues at over 90% still come from the UK. Its core current goals are to grow and innovate in the UK, expand its presence in Germany, and enhance its capabilities to support long-term growth. 

For investors, a highly uncertain economic outlook including a cost-of-living crisis cannot be overlooked. Food and beverage sales have yet to recapture their former pre-pandemic levels, while rising costs continue to offer a headwind. 

On the upside, a recovery from the pandemic is evident with room number expansion in both the UK and Germany ongoing. Initiatives to help return food and drink sales to pre-pandemic levels are being pursued, while cost growth for the year ahead is forecast to moderate. 

On balance, and given Whitbread’s budget hotel focus in tough economic times, plus potential for further expansion in Germany, investors look unlikely to check-out just yet. 


  • Ongoing programme of investment
  • German expansion


  • Lacks the geographical diversity of other hotel operators
  • Uncertain economic outlook

The average rating of stock market analysts:


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