HomeBusinessMoneyPremier Inn owner sees temporary 'softening' in demand amid Omicron

Premier Inn owner sees temporary ‘softening’ in demand amid Omicron

Premier Inn owner Whitbread sees temporary ‘softening’ in demand amid Omicron but expects hotel sales to fully recover by the end of the year

  • Whitbread saw sales increase over 3% in the quarter to 25 November
  • But rise of the Omicron variant of Covid-19 led to demand easing
  • The group expects hotel sales to fully recover by the end of 2022 

Premier Inn hotel group owner Whitbread suffered a hit to bookings in the last few weeks amid the rise of the Omicron variant of Covid-19.

Whitbread, which also owns the Beefeater chains, saw sales increase by 3.1 per cent in the quarter to 25 November, but concerns over Omicron in the last few weeks led to ‘softening’ demand, the group said. 

Total food and drinks sales fell over 11 per cent during the festive season, but Whitbread’s like-for-like hotel revenue was 5 per cent higher than the same period the previous year.

Whitbread expects sales at its UK hotels to fully recover this year. 

Bookings: Premier Inn hotel group owner Whitbread said the group suffered a hit to bookings in the last few weeks

In its latest update, Whitbread said its operations in Germany had been hardest hit amid tighter lockdown restrictions over the period. 

Whitbread said today: ‘Market-wide supply chain challenges, and potentially softer trading in January and February, mean we have delayed around ÂŁ20million of our previously guided…marketing and refurbishment investment plans this year, and our capital expenditure will now be around ÂŁ275million.’

Boss Alison Brittain revealed today that the group had seen an improvement in supply chain pressures across the group in recent weeks.   

In today’s update, Ms Brittain said: ‘Q3 represented another strong performance in the UK with Premier Inn continuing to trade significantly ahead of the market. 

‘High levels of leisure demand and improving business demand helped maintain like-for-like accommodation sales ahead of pre Covid-19 levels. 

‘UK accommodation sales remained resilient in December, albeit softening as we moved through the month and into the festive period as a result of the onset of the Omicron Covid-19 variant. Whilst our hotel performance was excellent, the value pub and restaurant sector in which we operate remains more challenging.’

Victoria Scholar, head of Investment at Interactive Investor, said: ‘Whitbread said it expects Premier Inn’s revenues per average room will recover to pre-Covid levels this year. 

‘While quarterly total UK sales came in 3.1 per cent ahead of full-year 2020, total food and beverage sales fell by 11.1 per cent. The company warned that government lockdown restrictions are weighing on its German market and also warned that sector cost inflation will continue to be above historic levels in 2023.

‘Despite a flat performance for its shares in 2021, the stock has been trading in an ascending trendline since the December trough, with higher highs and higher lows and has recovered almost 70 per cent of its declines from the high at the beginning of November. 

‘The last few weeks have seen very few red candlesticks on the chart suggesting that from a technical perspective the bulls are gathering momentum with ÂŁ34.50 as the next major resistance hurdle.’

Mamta Valechha, equity research analyst at Quilter Cheviot, said: ‘For investors, Whitbread can be viewed as a Covid recovery play and we have conviction that Premier Inn hotels will emerge from the crisis stronger and we see upside from the acceleration of the roll-out story in the UK and Germany.’ 

Shares in FTSE 100-listed Whitbread rose today, and just before 11am were up 0.56 per cent or 18.00p to 3,217.00p. 

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