Hotel and restaurant operator Whitbread (LON:WTB) confirmed its FY outlook after what it called a ‘strong’ Q1 performance. The group also stuck to its new five-year ambition to reduce overheads and increase free cash flow.
Positive trading
For the 13 weeks to end-May, Whitbread posted a 2% increase in group sales. The firm said trading was positive in Premier Inn UK and Germany, while restaurant sales declined as expected.
UK accomodation sales rose 3%, while RevPAR (revenue per available room) rose 2%, outperforming the midscale and economy market. London accomodation sales and RevPAR were up 7% and 4% respectively.
Food and beverage sales continued to decline as the firm exits branded restaurants to become a pure-play hotel business. However, accomodation sales in Germany were up 13% with RevPar s’significantly’ above the sector average.
For FY27, the company stuck to its guidance thanks to ‘strong’ UK peak leisure bookings and progress in Germany. It also reiterated its targets of reducing capital intensity by £1 billion and growing free cash flow by £2 billion by FY31.
We must have a different view of what constitutes ‘strong’ trading because 2% growth is hardly blowing the doors off. Then again, the consensus is for FY sales to shrink by 1% and RevPAR to grow just 0.8% so on that basis Q1 wasn’t bad.
The firm reckons its average London room rate was £106 in Q1, but we struggle to reconcile that with the prices being asked online. We routinely see London room rates of £150 to £200, but maybe that is midscale/economy nowadays.
It will be interesting to see whether US activist investor Corvex has anything to say about today’s update. Earlier this year the manager, who owns 7% of the shares, called for Whitbread to put itself up for sale.
Read the press release here:
https://www.whitbread.co.uk/investors
