Interactive Investor

ii view: Premier Inn’s ‘outstanding’ Q1 is boost for Whitbread

22nd June 2023 11:31

by Keith Bowman from interactive investor

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A budget offering in tough economic times and expanding overseas. Buy, sell, or hold?


First-quarter trading update to 1 June

  • Total revenues up 19%
  • UK accommodation sales up 18%
  • UK Food & Beverage sales up 10%. 

Chief executive Dominic Paul said:

"Our business is in great shape and trading well. Given the lack of branded supply growth and permanent decline in the independent sector, I am confident that our business model will continue to deliver as we strengthen Premier Inn's position in the UK, unlock our potential in Germany and maximise long-term returns for our shareholders."

ii round-up:

Premier Inn and Beefeater owner Whitbread (LSE:WTB) today offered confidence in its outlook as it detailed growth in both accommodation and Food and Beverage (F&B) sales. 

Total sales for first quarter to the start of June rose 19% year-over-year, with UK hotel demand climbing 18% and F&B sales up 10%. 

The FTSE 100 company's share price eased slightly in UK trading having come into this latest news up a third year-to-date. Fellow blue-chip hotelier InterContinental Hotels Group (LSE:IHG) is up by around a quarter over that time while budget pub chain Wetherspoon (J D) (LSE:JDW) has climbed by around a half. The FTSE 100 is up less than 1%. 

Total accommodation sales for Whitbread’s expanding German portfolio of 56 hotels more than doubled year-over-year, buoyed by a continuing recovery in demand following the pandemic. 

Accompanying management outlook comments flagged forward UK bookings well ahead of last year, with expectations for its German business to break-even during calendar year 2024 unchanged. 

Whitbread’s £300 million share buyback programme continues, with first-half results expected to be announced on 18 October. 

Broker UBS summarised the update as ‘reassuring’, reiterating its ‘buy’ stance on the shares. 

ii view:

Whitbread’s Premier Inn budget hotel chain is the leading operator in the UK with more than 800 outlets offering over 83,000 rooms. Expansion in the UK and Ireland continues with up to 2,000 new rooms expected to be opened this financial year. In Germany, its existing 10,000 rooms is being added to with a further 6,000 rooms in the pipeline. Group strategy has focused on growing and innovating in the UK, expanding its presence in Germany, and enhancing its capabilities to support long-term growth. 

For investors, the tough economic backdrop including rising mortgage costs cannot be ignored. Costs for businesses generally remain elevated, with trading across the pub sector and including its own outlets still difficult. Geographical diversity lags other players such as Accor SA (EURONEXT:AC), while the estimated share price to Net Asset Value (NAV) sits marginally above the three-year average, suggesting the shares are not obviously cheap. 

More favourably, positive trading momentum continues, with management outlook comments striking a confident tone. Initiatives to assist food and drink sales are being pursued, there's been press speculation regarding the possible sale of around 250 pubs, while Whitbread's German business remains on track to break-even next year. 

For now, given its focus on value offerings in tough economic times and continued expansion in both the UK and Germany, investors look unlikely to check-out just yet. 


  • Expanding in both the UK and Germany
  • Share buyback programme


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

The average rating of stock market analysts:


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