Whitbread PLC (LSE:WTB) (Whitbread PLC (LSE:WTB)) said it would resume dividend payments as it announced a return to profit and a recovery in hotel bookings, but it also cautioned that cost inflation in the hospitality sector is set to be higher than previously expected.
The Premier Inn-owner posted statutory pre-tax profit of £58.2mln for the year to 3 March 2022, compared to a loss of £1bn in FY21. Revenue surged 189% to £1.7bn on the "strong recovery in sales" following the easing of COVID-19 restrictions, although it was still below the £2bn recorded in pre-pandemic FY20.
"Whitbread's performance in the year was strong, with revenues and profits recovering exceptionally well from last year. Our hotels traded well-ahead of the market in the UK," said chief executive Alison Brittain.
The FTSE 100 firm declared a final dividend per share of 34.7p, reflecting "encouraging trading, and confidence in the outlook".
Whitbread said it expects cost inflation to reach 8%-9% this financial year, which is 1% higher than previously anticipated. It believes it can offset the higher inflation through price rises, cost savings and estate growth.
Total UK accommodation sales were 198% ahead of FY21, while UK food and beverage sales rose 170.2%, reflecting a strong recovery in the hospitality sector.
"As restrictions eased after the first quarter, high levels of leisure demand and improving business demand helped drive UK accommodation sales ahead of pre-COVID levels throughout the summer and into autumn, with sales remaining resilient through Q4 despite the emergence of the Omicron COVID variant," said Brittain.
The rebound has continued into the current year, with Premier Inn UK's total accommodation sales in the seven weeks to 21 April 2022 rising 326.6% on the same period last year and 29.9% on the (pre-COVID) 2020 financial year.
The group expects to add around 1,500-2,000 rooms in the UK this year.
However, it noted that COVID restrictions have been a significant headwind for the German hotel market, and while restrictions were removed at the beginning of April, Germany is still far behind pre-COVID levels.
It is forecasting a pre-tax loss of £60mln-£70mln for Premier Inn Germany in FY23.
"The hotel market in Germany is recovering at a slower pace than the UK due to the higher level of government restrictions which have lasted longer," said Brittain.
"The opportunity for the group to create value in Germany remains compelling as we look forward to being able to fully trade the estate, in the majority of cases for the first time, in the absence of government restrictions."