ii view: Whitbread mulls efficiency boost measures

Third-quarter trading update to 27 November

• UK revenue per available room (RevPAR) up 3%
• German RevPAR up 7%

Guidance:

• Now expects cost savings for the current 2026 full year of £75-80 million, up from a previous £65-70 million
• Now expects the impact of UK Budget changes to business rates for full year 2027 ahead of £35 million, down from a previous estimate of £40-50 million

Chief executive Dominic Paul said:

"We delivered a strong performance in the third quarter, with positive momentum across the business. Our vertically integrated model means we are well-positioned to adapt to shifts in the trading and fiscal environment and can continue to deliver sustainable and long-term value for shareholders. 

“As previously announced, in response to the recent UK Budget, we are exploring a variety of options in order to further drive profits, margins and returns and will provide an update to the market regarding our Five-Year Plan at the time of our FY26 Preliminary Results on 30 April 2026."

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ii round-up:

Whitbread (LSE:WTB) via the Premier Inn brand is the UK’s largest hotelier. The FTSE 100 company operates around 86,000 rooms in the UK and Ireland with a 2030 target of 98,000 rooms and an eventual goal of 125,000 rooms in its sights. 

Its Food and Beverage (F&B) restaurant brands include Beefeater, Bar + Block, Brewer’s Fayre, and Table Table. 

Starting the German business in 2016, Whitbread operated around 11,000 rooms in the country in August 2025 and is targeting an estate of 20,000 rooms by the full year 2030. 

For a round-up of this this latest trading update announced on 13 January, please click here.

ii view:

Founded by Samuel Whitbread in 1742 as a brewery, Whitbread’s Premier Inn hotels today compete against rivals like Travelodge, Accor and Holiday Inn owner InterContinental Hotels Group (LSE:IHG). Headquartered in Dunstable, the hotelier employs over 30,000 people. Accommodation generated its biggest slug of sales during this latest quarter at around four-fifths, with food and drink the balance. 

Geographically, the UK made most sales in its last financial year at 90.7%. That was followed by Germany at 7.7%, Ireland at 1% and a small joint venture in the Middle East the balance of 0.6%.

For investors, raised UK taxes now offer increased profit headwinds. Disruption to restaurant operations under format changes and in conversions to hotel rooms are hindering F&B sales. The weather and the timing of bank holidays can impact performance. Group net debt including lease liabilities as of late August of £4.8 billion stands at a similar level to the group’s current stock market value, while Whitbread lacks the geographical diversity of other players such as InterContinental. 

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More favourably, consideration to further increase efficiency and profits is now being made, with an update regarding the group’s existing five-year Accelerating Growth Plan. Targets for an increase in adjusted pre-tax profits of at least £300 million between 2025 and 2030 is expected with annual results on 30 April. Ambition to grow hotel room numbers in both the UK and Germany persists. Expected cost savings over the current financial year have been raised, while shareholder returns include an ongoing £250 million share buyback programme to late April. 

For now, increased tax headwinds and a tough consumer environment offer caution. However, management initiatives and a forecast dividend yield of around 3.6% are likely to keep investors interested. 

Positives: 

• Expanding in both the UK and Germany
• Pushing cost saving initiatives

Negatives:

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

The average rating of stock market analysts:

Strong hold