TIDMWTB
RNS Number : 6524C
Whitbread PLC
19 June 2019
Q1 FY20 Trading Update
19 June 2019
Resilient performance in tough market conditions
-- UK total accommodation sales declined 1.5% in the quarter due to weak trading conditions
-- In-line with previous guidance, caution on the UK business environment given macro uncertainty
-- On plan with our efficiency programme helping to partially offset high industry inflation
-- German expansion firmly on target, with 7,000 rooms open and committed
-- Continued investment in UK & Germany given long-term structural opportunity
-- Tender offer to be launched 20 June to return up to GBP2
billion, subject to shareholder approval
UK like-for-like UK Total UK & International(1)
Sales Growth Sales Growth Total Sales Growth
================= ========================== ===================== =============================
Accommodation (4.6)% (1.5)% (1.3)%
Food & beverage (2.1)% (0.4)% (0.4)%
------------------------- --------------------- -----------------------------
Total (3.7)% (1.1)% (1.0)%(2)
================== ========================= ===================== =============================
(1) Includes Germany; (2) excludes GBP3 million non-underlying
TSA income
Alison Brittain, Whitbread PLC Chief Executive, said:
"We have delivered a resilient performance in the first quarter
despite more challenging market conditions and we continue to make
good progress with our efficiency programme, which is helping to
partially offset another year of high industry cost inflation.
Our expansion into Germany is firmly on target. Our new hotel
opening in Hamburg is performing above our expectations and our
hotel in Frankfurt continues to perform well. We will open another
two organic sites during this financial year and complete the first
tranche of the 19-hotel Foremost Hospitality acquisition, with 13
being rebranded to Premier Inn in the first half of next year.
Whilst we are cautious about short-term market conditions, we
are confident in our plans given the significant growth
opportunities in the UK and internationally. Given our strong
balance sheet, efficiency programme and robust business model, we
are in a strong position and we will continue to invest in order to
maintain Premier Inn's competitive advantages and to capitalise on
our structural growth opportunities."
Update on market conditions
The weaker business and leisure confidence has continued, as
referenced at the start of the year, coinciding with ongoing
political and economic uncertainty in the UK. This has impacted
domestic hotel demand, particularly in the regional business
market, where most Premier Inn hotels are located. As a result of
weaker demand, Premier Inn's UK total accommodation sales declined
1.5% in the first quarter and F&B performance also declined
slightly. It is difficult to predict how business confidence and
business investment will evolve over the year, however, we continue
to monitor its impact on the market closely and will provide an
update at our first-half results in October.
Update on Return of Capital
Whitbread intends to return up to GBP2.5 billion of the net cash
proceeds from the sale of Costa to shareholders, unless more value
creating opportunities arise and subject to prevailing market
conditions. The first phase has now been completed, with GBP482
million returned to shareholders through a share buyback programme,
which ended on 10 May 2019. For the second phase, Whitbread now
intends to pursue a Tender Offer to repurchase up to a further GBP2
billion of shares, subject to shareholder approval. If less than
GBP2 billion is returned through the Tender Offer, the Board will
consider a possible third phase to return any remaining surplus
cash.
Investor queries
Matt Johnson, Whitbread PLC | matt.johnson@whitbread.com | +44
(0) 7848 146 761
Ann Hyams, Whitbread PLC | ann.hyams@whitbread.com | +44 (0)
7796 709 087
Amit Mistry, Whitbread PLC | amit.mistry@whitbread.com | +44 (0)
7540 150 350
Media queries
David Allchurch / Jessica Reid, Tulchan Communications | +44 (0)
20 7353 4200
First Quarter FY20 performance summary
-- Total UK accommodation sales declined 1.5% in the quarter, due to weak market conditions
-- Investment in new hotels continued, with 282 UK rooms opened during the first quarter
-- New hotel in Hamburg is performing well ahead of expectations
Like-for-like Total Sales
Sales Growth Growth
============================ ========= ============== ==============
Accommodation (4.6)% (1.5)%
Food & beverage (2.1)% (0.4)%
-------------- --------------
UK & Ireland (3.7)% (1.1)%
Germany n.a. 77.3%
-------------- --------------
Total Sales n.a. (1.0)%
-------------- --------------
Like-for-like
UK metrics Actual Growth Growth
--------- -------------- --------------
Occupancy 74.8% (230)bps -
Average room rate GBP61.45 (3.4)% -
Revenue per available room GBP45.98 (6.3)% (6.0)%
Net number of hotel rooms 76,385 214 -
============================ ========= ============== ==============
UK & Ireland
During the first quarter, UK total accommodation sales declined
1.5%. This was predominantly due to declining business confidence,
impacting short-lead bookings. During the quarter 282 new rooms
were added in the UK, with 3,000 to 3,500 rooms expected to be
added during the financial year.
In London, significant room additions of 9.4% over the last year
contributed to Premier Inn's total accommodation sales growth of
1.0%. However, like-for-like accommodation sales declined 4.2%,
reflecting weaker market conditions. London continues to be a good
long-term market with strong demand and high occupancy levels, and
further capacity will be added.
The regional market continues to be impacted to a greater extent
by declining business confidence, with total accommodation sales
for the regional Midscale & Economy market declining 1.5% in
the first quarter. Premier Inn has a greater business mix than the
market, contributing to a total accommodation sales decline of 2.2%
over the same period, driven primarily by weak short-lead business
bookings. Although forward bookings look positive, caution remains
on the UK hotel environment given ongoing political uncertainty and
the impact this has on business confidence.
Germany
Whitbread's first German hotel in Frankfurt continues to perform
well, with occupancy levels of around 70%, whilst maintaining 100%
direct bookings. Whitbread's second German hotel in Hamburg has
been open for three months, performing ahead of expectations with
very positive customer feedback. This year, two organic hotels in
Germany will be opened and Whitbread will complete the first
tranche of the Foremost Hospitality acquisition of 19 hotels, with
13 being rebranded to Premier Inn in the first half of next
year.
Whitbread expects to add 3,000 to 3,500 rooms in the UK and over
2,000 in Germany. Most of the German room additions are part of the
Foremost acquisition and will require a period of closure to be
rebranded into Premier Inn hotels early in FY21. The current
pipeline of nearly 20,000 rooms is secured through a mixture of
freehold, leasehold and acquisitions, with almost a third of the
pipeline committed in Germany. This new capacity is expected to
mature to reach return on capital in-line with the current
estate.
Appendix I | Premier Inn UK hotels performance comparison
Q1
Year-on-year Premier Inn UK accommodation Midscale & economy
change market(3)
Like-for-like Total Like-for-like Total Total Sales Total RevPAR
Sales Sales RevPAR RevPAR
============== ======= ============== ======== ============ =============
London (4.2)% 1.0% (4.4)% (6.1)% 3.5% (0.6)%
Regional (4.7)% (2.2)% (6.4)% (6.6)% (1.5)% (4.6)%
-------------- ------- -------------- -------- ------------ -------------
Total UK (4.6)% (1.5)% (6.0)% (6.3)% (0.1)% (3.4)%
============== ============== ======= ============== ======== ============ =============
(3) STR Global
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END
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