Whitbread PLC’s (LON:WTB) lacklustre quarterly results did not impress the market, but number-crunchers are keeping their spirits high looking at the long-term promise.
Shares dropped 6% in the morning, as the City was spooked by an expected £60mln hit on margins in the year to February 2021 due to inflation and capital expenditure.
READ: Whitbread's underlying revenue dips as provinces stay weak
Other woes came from the UK regional market, hit by weak demand in business travel which can only rally with an improved British economy.
The Premier Inn owner, however, is focusing on expanding in Germany, where 20 new hotels are set to open throughout 2020, adding to the existing three.
Analysts see a ripe market for the FTSE 100-listed group, as the European country is lacking a strong branded hotel presence.
While the payoff for this effort is yet to become apparent, management said next year losses from the German business will narrow by £10mln.
“Running a hotel chain is about planting flags in the right location and keeping the price point attractive to the target market, as well as offering an experience which makes the customer want to come back again and again,” said Russ Mould, investment director at AJ Bell.
“While market conditions may be weak at the moment, in a year or so the story could be very different so Whitbread isn’t going to stop expanding now just because trading isn’t great,” he added.
Shares dropped 5% to 4,853p on Thursday afternoon.