Whitbread has published its latest results covering the 26 weeks to 26 August 2021, showing Premier Inn's recovery was ahead of expectations.
FY22 H1 highlights
• Significant market outperformance in the UK, with Premier Inn total accommodation sales 12.3 pp ahead of the midscale and economy market in H1, and 13.9 pp ahead in Q2
• Expansion continuing at pace in Germany with the total open and committed pipeline now at 73 hotels, with statutory revenue 197.3% ahead of FY20
•Recovery in UK demand was very strong post 17 May when leisure overnight stays were permitted with total accommodation sales improving from down 60.9% and 9.6% respectively in Q1 and Q2 vs FY20, and up 10.5% in August
•Leisure demand remains strong in the UK into H2, with business demand improving, resulting in September total accommodation sales up 9.7% vs FY20.
•Occupancy in Germany grew to 47% in Q2 and over 60% in August and September
•Better placed than most to deal with the challenging operating and inflationary environment (wages, utilities)
•Investing in people, marketing and refurbishments capitalising on the recovery and market capacity reduction
•Remain confident in our ability to execute acquisitions at good returns in Germany
• H1 FY22 statutory revenues were 39.0% down compared to H1 FY20 as a result of the COVID-19 restrictions that were in place during the first half:
• COVID-19 restrictions materially impacted the performance of the UK business in the first quarter. Only essential business guests were permitted to stay overnight until 17 May, at which point overnight leisure stays were permitted. Our restaurants were also not permitted to open for indoor service until the same date, with the majority remaining temporarily closed until then. The majority of our hotels and restaurants have operated restriction-free from 19 July. This resulted in UK statutory revenue being down 39.4% compared to H1 FY20
• Restrictions were in place throughout the half in Germany, the impact of which was offset by the growth in the estate, resulting in statutory revenue 197.3% ahead of H1 FY20 driven by the material growth in the estate
• The adjusted loss before tax of £56.6m benefitted from £141.6m1 of COVID-19 related Government support schemes in the UK and Germany, and the statutory loss before tax of £19.3m also benefitted from £37.3m of adjusting items credits (£28.6m profit in property disposals and £8.7m VAT claim)
• The Group retains a strong balance sheet and liquidity position with a cash inflow before debt repayments of £106.7m in the half, reflecting the improved trading performance compared to the same period last year. Net cash at the end of H1 was £60.2m
• Sales recovery is ahead of expectations, and while a number of uncertainties remain, UK like-for-like RevPAR run rate has the potential to reach full recovery at some point in 2022
• Confident on the return to pre-pandemic UK profit margins, however we will have to wait to assess speed of recovery once we have greater visibility of longer-term inflation and supply chain pressures
Driving long-term value
• In the UK, we will continue to grow by leveraging the powerful competitive advantages of our scale, brand, direct distribution, best-in-class operating model, and broad customer reach
• Whitbread is well-placed to take advantage of the likely accelerated supply contraction in the market and constrained investment amongst independent and budget branded operators in the UK and Germany
• Our strategy is underpinned by our well-established Force for Good programme, delivering ambitious commitments to operate responsibly and sustainably, and reflecting the positive impact we can make for our employees, customers, suppliers, investors, communities and the environment
Alison Brittain, Whitbread Chief Executive Officer, (pictured), commented, 'Whitbread traded significantly ahead of the market in the UK during the first half of the year, with our regional hotels trading ahead of pre-COVID-19 levels in the last six weeks of the half. This strong performance has continued into the second half, with sustained high levels of leisure demand and resilient demand from tradespeople.
'Whilst some uncertainty remains over the speed and timing of the market recovery for office-based and international demand and the evolution of the pandemic in the winter months, we believe that UK like-for-like RevPAR run rates have the potential to reach full recovery in at some point during 2022.
'The operating environment during the summer and into autumn has been challenging largely as a result of our very high occupancy levels, market-wide supply chain issues and a tighter labour supply in the hospitality sector.
'Although we are not immune from these challenges, we are well placed to respond. Our £100m efficiency programme is well underway and we are 'investing to win' in our teams, our hotels and our marketing, in order to continue to grow our market share as demand recovers and as our competitors continue to be under pressure.'
Brittain went on, 'In Germany, we are well on the way to building a business of scale with a growing national presence. Our open and committed hotel network now stands at 73 hotels, and we continue to look for opportunities to grow our footprint at pace both organically and through acquisitions.
'The budget hotel market is recovering ahead of the overall market and we are seeing growing demand and occupancy levels in our open hotels, alongside encouraging customer scores.
'Our strong balance sheet enables us to continue investing in hotel growth in both the UK and Germany and in commercial initiatives and refurbishments, strengthening our market position and driving further market share gains.
'In the UK, our performance is underpinned by our uniquely advantaged and market-leading position, built on our scale, direct distribution, and the strength of the Premier Inn brand. In Germany, we believe the opportunity to create value is significant and our commitment to that market will be substantial, delivering good long-term returns.
Brittain finished, 'Our strategy of 'investing to win' has driven a strong relative performance through the first half of the year, and we have the market position and platform to continue this level of performance into the second half of this year and beyond.'