Premier Inn owner Whitbread PLC (LSE:WTB) needs to demonstrate progress in three areas in next week’s update, says UBS.
These are: Revenue per room (RevPAR) resilience in the UK; confirmation of break-even in Germany on a run-rate basis in the second half of the year and execution of the conversion of 112 branded restaurants into new rooms and disposal of another 126 branded loss-making restaurants over the next two years.
Whitbread has already warned about the costs of the tax rises in the Budget and that kick-in in April, but another broker, Berenberg, is still upbeat on the medium-term prospects for the Premium Inn owner
“As a business that generates more than 90% of its revenues from the UK, Whitbread’s costs will rise due to changes made in the UK budget.
“We estimate all the national insurance changes could increase personnel costs by £25-30 million, with higher wages driving mid- to high-single-digit labour cost inflation.
“Whitbread does have levers available that could mitigate some of this impact on costs, including bringing forward cost efficiencies, adjusting headcount and pricing increases.
“The effect of the UK budget that we expect for Whitbread is likely to be felt across the entire industry.
“Supply remains tight and we believe could tighten further, supporting RevPAR over the coming years.”