Whitbread PLC (LSE:WTB), the owner of Premier Inn, swung to a profit in its first half of the 2023 financial year, with earnings 40% ahead of pre-pandemic levels as the travel sector continues to recover.
But it cautioned that costs for the full year are set to rise by £60mln due to inflation pushing up the cost of labour, utilities and food and beverages, and following brought-forward investments in IT and marketing.
Statutory profit before tax exceeded expectations, coming in at £307.4mln, compared with a loss of £19.3mln in the same period last year and a profit of £219.9mln in the first half of FY20 (pre-Covid).
Revenue surged 104% to £1.35bn and was 25% ahead of the first half of FY20.
With “strong” current trading for the 26 weeks to 1 September 2022, positive lead indicators, a declining independent sector and the resilience of its business model, the company said it remained confident in its full-year outlook.
It added its sustained programme of investment had been helping deliver significant market outperformance, while a strong balance sheet with significant asset backing being vital to its operating model’s success.
Regarding Premier Inn in the UK, despite macroeconomic uncertainty, market demand remained “robust” and momentum into the third quarter was in line with its year-to-date trend.
Its continued outperformance saw total accommodation sales 25.9 percentage points ahead of the midscale and economy market in the first half, driven by Whitbread’s scale, the strength of the brand, direct distribution model, operational excellence and its winning customer proposition, the company said in a statement Tuesday.
Total UK accommodation sales were 101% ahead of H122 and 35% ahead of H120, while it said it remains on track to add 1,500 to 2,000 rooms in the UK and between 2,000 and 2,500 more in Germany in FY23.
"We remain focused on maintaining our position as the UK's number one hotel chain and are well on the way to replicating that success in the German market,” Alison Brittain, chief executive, commented.