Broker Panmure repeats a 'hold' stance on Whitbread plc (LON:WTB), saying although the half year numbers slightly beat expectations, the outlook is cautious.
Earlier the firm said market share was growing in both Premier Inn and Costa Coffee but the latter's underlying operating profit fell 4% in the period due to increased investments, including the living wage.
Panmure analyst Anna Barnfather said on the group as a whole that LFL (like-for-like) sales of 2% was an improvement from 1.8% in the first quarter.
But she notes this is increasingly being driven by room extensions rather than RevPAR (revenues per available room) or like-for-like sales at Costa - hence is likely to be a drag on returns.
Meanwhile, the analyst notes that accountancy group PwC recently revised its forecasts downwards and now expects London RevPAR to fall 2.8% this year and 0.5% next year, compared to plus 1.9%and 2.2% previously.
PwC expects regional RevPAR growth of plus 3.4% and 2.3% , down from 4.2% and plus 3.2%, she added.
This caution is largely due to above average supply growth, especially in London where 7,200 ( plus 5%) new rooms are expected to open.
Barnfather says with this in mind, Panmure forecasts Premier Inn RevPAR growth of negative 1.0% in 2017 and plus 1.0% in 2018 as the disruption from extension program fades.
Panmure's target price is 4,000p.