Shares in Whitbread PLC (LSE:WTB) could find support from a resilient third-quarter trading update and the prospect of easing cost pressures, according to Citi, ahead of results due next month.
The bank expects Whitbread to report revenue per available room, or RevPAR, a key hotel industry metric, slightly ahead of market expectations for the third quarter.
Citi’s tracking data points to RevPAR growth of about 2.2% in the UK and a much stronger 6.8% in Germany, with December trading described as solid in both markets.
Premier Inn’s UK performance is expected to show continued resilience despite a softer consumer backdrop, while Germany remains a standout as Whitbread builds scale in a less mature but growing market.
Citi also expects investors to focus on costs, particularly business rates and other inflation-linked expenses.
Whitbread previously guided to an increase of £40 million to £50 million in business rates in the 2027 financial year, but Citi believes this estimate may be revised down.
The bank argues that the midpoint of the guidance looks high once transition relief is taken into account, while assumptions for non-labour cost inflation of about 6.5% also appear stretched.
Any revision would matter. Whitbread’s business has high operating leverage, meaning relatively small changes in costs can have an outsized impact on profits.
While recent reports of possible UK policy changes on business rates are unlikely to materially alter the outlook, Citi thinks internal assumptions could still become more favourable.
It retains a 'buy' rating on the shares with a target price of £31, seeing a solid trading update as a potential catalyst.