Shares in Whitbread (LON:WTB) rose after the hotels-to-restaurants operator reported strong accommodation sales growth and forecast-beating profits for H1. The Premier Inn owner also maintained FY27 guidance, which points to a second year of profitability.
Ahead of a general meeting on 9 November, Whitbread urged shareholders to reject US activist Corvex’s demands for a board seat and changes to its strategy. This demonstrated confidence in the company’s five-year turnaround strategy to become an ‘even stronger, more profitable and less capital intensive business’.
H1 profit beat
For the half to 27 August, adjusted pre-tax profits fell 9% to a better-than-feared £287 million. Strong hotel trading in the UK & Ireland and Germany offset cost inflation.
| H1 FY27 | Year-on-year change | |
| Revenue (£m) | 1,572 | +2% |
| Adjusted pre-tax profit (£m) | 287 | -9% |
| EPS (p) | 125.1 | -6% |
| Group ROCE | 10.9% | +60bps |
Source: Whitbread, H1 results
In the UK and Ireland, Whitbread extended its market outperformance with accommodation sales up 3% year-on-year. The company also delivered positive RevPAR (revenue per available room) growth for the fifth consecutive quarter.
Whitbread said strong trading momentum has persisted into H2. For the five weeks to 1 October, UK accommodation sales and RevPAR were up 4.5% and 3.2% respectively. And in Germany, accommodation sales grew an impressive 31.2%.
What did the CEO say?
CEO Dominic Paul commented: ‘With excellent strategic progress and strong current trading momentum, our plan is working. Against this positive backdrop, the board strongly recommends that all shareholders vote against the resolution proposed by Corvex at the forthcoming shareholder meeting.’
Paul added: ‘We are executing well and remain confident in both the full year outlook and the delivery of our five-year plan that will generate £2 billion available for shareholder returns by FY31.’
Why investors toasted Marston’s
Elsewhere in hospitality, Marston’s (LON:MARS) shares spiked after the pubs play upgraded earnings guidance. Marston’s now expects FY26 underlying pre-tax profits to be ‘above the top end’ of market expectations.
FY26 consensus had called for underlying pre-tax profits of £78.4 million, with a range from £76.1 million to £83.2 million.
Like-for-like sales improved to broadly flat in Q4, said Marston’s. This revenue performance was supported by new pub formats, stronger summer trading and ‘an excellent’ World Cup.
‘Our progress over the last three years shows the momentum we have as a high margin, highly cash generative local pub company, with profits substantially up and debt levels halved,’ said CEO Justin Platt.
‘With clear strategic priorities and our new format conversion programme expanding to at least 100 pubs next year, we enter the new year well set to drive our next phase of growth.’
Shares in Whitbread have suffered a de-rating in recent years and are cheap relative to their own history. As such, we think this is an attractive entry point for investors.
Under Paul, the hotels titan is executing its five-year plan at pace. And thanks to the strength of the Premier Inn brand, Whitbread is well-placed to take advantage of a favourable supply environment in the UK & Ireland.
According to Stockopedia data, Marton’s also looks cheap with the shares trading on around five times forecast FY26 earnings. However, in common with other pub companies, Marston’s carries significant amounts of debt. And this leverage could continue to weigh on sentiment in a higher interest rate environment.
