Whitbread PLC (LSE:WTB), the owner of Premier Inn hotels, said it is confident of delivering a strong first-half performance as trading in the UK and Germany beat expectations.
Premier Inn accommodation sales were up 27.2 percentage points ahead of the market, Whitbread said in a statement, citing STR data for 4 March 2022 to 26 May 2022.
Total sales in the first quarter were 235.6% ahead of the same period of 2022, representing 31% growth compared to pre-pandemic levels in the equivalent period in 2020.
"The strength of Premier Inn's recovery in the UK continues to be ahead of expectations with a particularly strong Q1 performance that is well ahead of pre-pandemic levels and we continue to significantly outperform the market," Alison Brittain, chief executive officer, said.
"The trading performance of our more mature hotels in the two months post the lifting of COVID restrictions only reinforces our positive view of the significant opportunity in Germany.
"This impressive Q1 performance together with improved visibility into Q2, gives us increased confidence in delivering a strong first half and remaining ahead of the market for the rest of the year."
Food and beverage sales increased 585.3%, though were down 4.3% compared to the opening three months of 2020.
In Germany, where Premier Inn has 40 hotels, occupancy levels were 64.7% in the last month of the trading quarter.
Like-for-like accommodation sales in Germany, where it has boosted the number of hotels in its portfolio, grew 634.7% compared to the equivalent trading period in fiscal 2022.
Chief executive Alison Brittain said it now plans to add a further 38 in the country.
Food and beverage sales are “approaching pre-Covid levels”, the company said, adding marketing initiatives and new menus will drive sales.
Challenges facing the hotel sector include the decline of the independent hotel sector and a tight labour supply in hospitality.
Whitbread said it is targeting pay increases, expediting refurbishments and maintenance and spending on IT.
The hotelier intends to invest up to £30mln in labour, refurbishments and IT in 2023.
“Our high levels of occupancy and continued strong sales performance mean we remain confident in our continued margin recovery in the UK,” Whitbread said.
The company has renewed its debt with a new £775mln five-year revolving credit facility, as its old debt facility of £850mln was due to expire in September 2023.
The new facility will last for five years and has two options to extend by a year at a time, is multi-currency and provided by a syndicate of seven banks including Banco Santander, Barclays, NatWest and Bank of China.