TIDMWTB
RNS Number : 6221L
Whitbread PLC
14 January 2021
Q3 FY21 Trading Update
14 January 2021
Market share gains in the UK and expanding estate in Germany
despite challenging market conditions
Q3 summary (13 weeks to 26 November 2020)
-- Government COVID-19 restrictions continued to create very
challenging hotel market conditions
-- As a result, total UK accommodation sales were down 55.2% with occupancy at 49.3%
-- Despite this, a resilient operational performance resulted in:
o the vast majority of our hotels remaining open during the
quarter
o Premier Inn UK's total accommodation sales performance being
8.9pp ahead of the M&E market(1) with total market share growth
of 4.1pp to 11.4% (2)
-- Continued focus on operational excellence, health and safety
measures, efficiencies and managing cashflows
-- Accelerated estate growth in Germany, with an open and
committed hotel pipeline now at 68 hotels following the successful
completion of the acquisition of 13 hotels from the Centro
Group
-- Cash outflow for the quarter was in line with previous sensitivity guidance
-- The Group is well positioned to continue its outperformance
versus the market and to emerge in a strong position in the
long-term
Current operational and financial position
-- Improved demand for business travel, and some leisure travel,
resulted in the majority of our UK hotels remaining open during the
first half of December, with demand levels falling as the
Government's tier restrictions tightened in the second half of
December and through into the New Year
-- Following the updated UK Government restrictions announced on
4 January 2021, that only permit essential business and keyworker
accommodation, around two-thirds of our hotels remain open, while
all our restaurants are closed
-- With the increased restrictions, total UK accommodation sales
were down 66.4% for the 5 weeks to 31 December 2020 with occupancy
at 31.1%
-- 21 of our 29 operational hotels in Germany remained open but
under severe restrictions, and therefore similar to the overall
German hotel market, recorded low levels of occupancy. These
restrictions have been extended until at least the end of
January
-- The Group's balance sheet remains strong with a net cash
position at 31 December 2020 of approximately GBP40.0m compared to
GBP196.4m at the end of H1. Capital spend was GBP98.4m in the four
months to 31 December 2020. The Group also had cash on deposit of
GBP814.9m and access to a GBP900.0m undrawn revolving credit
facility, and up to GBP300.0m available under the Government's
Covid Corporate Financing Facility (CCFF) scheme
Comment from Alison Brittain, CEO:
"Since the start of the COVID crisis, we have responded quickly
and robustly to the changing restrictions and have learnt to
rapidly adapt our operations as required. This is testament to the
efforts of our colleagues who continue to work tirelessly to
maintain our very high operating standards, customer service and
high levels of health and safety. This response has enabled us to
continue to deliver strong market share gains in the UK,
demonstrating the benefits of our strong brand, direct
distribution, and our unique operating model.
We expect the current travel restrictions in the UK and Germany
to remain until at the very least the end of our financial year.
With the vaccination programme underway, we look forward to the
potential gradual relaxation of restrictions from the Spring,
business and leisure confidence returning, and our market
recovering over the rest of the year.
We are well placed to continue to outperform the increasingly
constrained budget branded and independent competitor sets, by
leveraging the benefits of our unique operating model. We expect to
see increasing opportunities to develop in both the UK and Germany
and are pleased to have accelerated our growth in Germany with the
recent acquisition of 13 hotels, taking the open and committed
pipeline to 68 hotels, a major step on our path to achieving a
nation-wide footprint with representation in most major towns and
cities.
We continue to protect our liquidity through the careful
management of our cash position, and to take actions to ensure that
we exit the crisis as a leaner, stronger and more resilient
business. Our strong balance sheet also provides the opportunity to
take full advantage of the enhanced structural opportunities that
we are already seeing in the market."
Q3 Financial Performance
The Group's financial performance in the quarter reflects the
impact of the ongoing COVID-19 Government restrictions in the UK
and Germany. The year-to-date performance also reflects the impact
of the closure of hotels and restaurants for the majority of the
first half of the financial year.
Financial highlights
Q3 Q3 YTD
--------------------- ---------------------------- ----------------------------
UK Germany Total UK Germany Total
--------------------- -------- -------- -------- -------- -------- --------
Sales growth:
Accommodation (55.2)% 5.9% (54.5)% (70.1)% 32.3% (69.5)%
Food & beverage (53.9)% (41.1)% (53.8)% (68.9)% (27.7)% (68.8)%
Total (54.7)% (2.3)% (54.3)% (69.7)% 21.5% (69.2)%
-------- -------- -------- -------- -------- --------
Like-for-like sales
growth:
Accommodation (56.0)% (68.5)% (56.2)% (70.7)% (65.6)% (70.7)%
Food & beverage (54.4)% (74.9)% (54.4)% (69.3)% (77.1)% (69.3)%
Total (55.5)% (69.5)% (55.6)% (70.2)% (67.5)% (70.2)%
-------- -------- -------- -------- -------- --------
Premier Inn UK total sales were 54.7% down in Q3 reflecting the
ongoing Government restrictions on the operations of hotels and
restaurants. Throughout the quarter, our operations team responded
quickly to changes in these restrictions, enabling the majority of
our hotel estate to remain open, and combined with our strong
brand, direct distribution and best-in-class operating model, drove
an 8.9pp outperformance of the midscale and economy market(1) .
Premier Inn's share of the total hotel market by revenue grew by
4.1pp to 11.4%(2) .
Occupancy levels reached 58% in September, driven by relatively
strong leisure demand in tourist locations and business demand
recovering from a very low base. These trends continued into the
first half of October ahead of the implementation of tiered
restrictions in England and firebreak restrictions in Wales,
helping October occupancy levels to 52%. The implementation of a
national lockdown in England from 5 November to 2 December, which
effectively permitted only essential business travel, saw occupancy
levels fall to 35% in November. Throughout the quarter, demand
remained stronger in the regions, with demand in metropolitan
areas, and in particular in London, remaining weak.
The Government restrictions had a greater impact on the
operations of our restaurants, with both the national lockdowns and
the restriction in the highest tiers forcing restaurant closures.
On average, 82% of our restaurants were open during the quarter,
and combined with reduced capacity in each restaurant and subdued
market demand, total food and beverage sales were 53.9% behind
year-on-year.
We continue to take action to ensure our cost base is reflective
of the current demand environment, including completing the
restructure of our hotel and restaurant operations teams that has
resulted in c1,500 colleagues leaving the business. This is less
than the maximum number of redundancies previously ind icated
(6,000), however targeted cost savings were still achieved as a
result of a greater proportion of colleagues accepting a reduction
in maximum contracted hours.
Premier Inn Germany
The increased size of the open estate in Germany (23 operational
hotels by the end of Q3, compared to 5 at the same time last year)
drove strong total sales growth in September of 58%, where customer
trends were similar to those in the UK. However, the impact of more
onerous travel restrictions in October and in November in
particular, resulted in a year-on-year decline in total sales for
the quarter of 2.3%.
Subsequent to the quarter end, the Group completed the
acquisition of 13 hotels (6 open, 7 pipeline) from the Centro Group
taking the total operational estate to 29 hotels, and a total open
and committed pipeline of 68 hotels. We have taken advantage of the
ongoing restrictions and the resultant subdued demand, to
temporarily close the six acquired open hotels and accelerate their
refurbishment and rebranding to Premier Inn.
Current trading
The further tightening of the COVID-19 restrictions in the
second half of December resulted in significant travel restrictions
and the closing of the majority of restaurants and pubs across the
UK. As a result, in the five weeks ended 31 December 2020, total UK
accommodation sales year-on-year were down 66.4% representing a
continued outperformance of the hotel market of 11.1pp, with total
UK sales down 73.4%.
Following the updated UK Government restrictions announced on 4
January 2021, that only permit essential business and keyworker
accommodation, around two-thirds of our hotels remain open, while
all our restaurants are closed.
The Government restrictions on the German hotel market are
similar to those in the UK with limited business to business travel
and no leisure travel permitted. As in the UK, this is impacting
our performance, with total Germany sales down 54.7% in the five
weeks to 31 December 2020. Total Group sales were down 73.3% in the
same period.
Sensitivity and outlook
The short-term trading environment remains challenging, and
given the ongoing and fast-changing nature of the COVID-19
situation, visibility of expected revenue and cost trends remains
very limited.
FY21 cash and profit sensitivities remain broadly consistent
with those articulated at our interim results in October.
In Germany, we are executing our strategy to drive long-term
value through the acceleration of our expansion, and investment to
build a platform of scale, both organically and through the
acquisition of assets at good prices. This, combined with the
ongoing impact of the COVID-19 restrictions, which we expect to
delay the sales maturity of our operating hotels by 12-18 months,
will suppress short-term performance, meaning that losses will
increase in FY22 and continue into FY23. The recent acquisition in
December of 13 hotels from the Centro Group will result in a loss
in Germany next year of cGBP10m whilst these sites are refurbished
and rebranded to Premier Inn. In addition, in FY22 the impact of
every 1% decline in Germany RevPAR vs our pre COVID-19 Germany
RevPAR expectation of c GBP60 w ill result in a GBP1m reduction in
profit before tax.
Notes:
1: STR data, full inventory basis, M&E market excludes
Premier Inn
2: STR data, revenue share of total UK hotel market
For more information please contact:
Investor queries | Whitbread | investorrelations@whitbread.com
Media queries | Tulchan Communications, David Allchurch / Jessica Reid | +44 (0) 20 7353 4200
A live Q&A teleconference for investors and analysts will be
held at 8:30am GMT on 14 January 2021. Details to join are noted
below. An on-demand version of this will be made available on the
website (
www.whitbread.com/investors/results-reports-and-presentations )
shortly after.
United Kingdom : 0800 640 6441
United Kingdom (Local) : 020 3936 2999
All other locations: +44 203 936 2999
Participant access code: 491008
Appendix:
1) Premier Inn UK key performance indicators
Sept Oct Nov Q3 Q3 YTD
=================================== ======== ======== ======== ========= =========
Room capacity open (average) 97% 98% 78% 91% 58%
Occupancy (full inventory) 58.3% 52.0% 35.3% 49.3% 29.9%
Average room rate GBP44.95 GBP48.85
Revenue per available room GBP22.15 GBP14.62
Total accommodation sales
growth (46.9)% (53.1)% (69.0)% (55.2)% (70.1)%
=================================== ======== ======== ======== ========= =========
Restaurants open (average) 99% 99% 43% 82% 48%
Total food and beverage
sales growth (35.2)% (49.9)% (83.1)% (53.9)% (68.9)%
=================================== ======== ======== ======== ========= =========
Total sales growth (43.0)% (52.0)% (73.9)% (54.7)% (69.7)%
Outperformance vs M&E market(1) 8.2pp 8.5pp 10.6pp 8.9pp 2.4pp
Market share gains(2) 3.7pp 3.7pp 6.2pp 4.1pp 2.7pp
=================================== ======== ======== ======== ========= =========
2) Premier Inn Germany key performance indicators
Sept Oct Nov Q3 Q3 YTD
================================ ====== ======== ======== ========= =========
Room capacity open (average) 100% 100% 100% 100% 79%
Occupancy (full inventory) 42.5% 33.0% 12.6% 29.5% 28.3%
Average room rate GBP43.26 GBP41.03
Revenue per available room GBP12.75 GBP11.62
Total accommodation sales
growth 65.0% 12.9% (59.2)% 5.9% 32.3%
================================ ====== ======== ======== ========= =========
Total food and beverage
sales growth 21.1% (62.9)% (74.5)% (41.1)% (27.7)%
================================ ====== ======== ======== ========= =========
Total sales growth 58.0% (1.9)% (61.8)% (2.3)% 21.5%
================================ ====== ======== ======== ========= =========
Notes:
1: STR data, full inventory basis, M&E market excludes
Premier Inn
2: STR data, revenue share of total UK hotel market
3) UK Quarterly sales & RevPAR growth
FY20 FY21
==== ========================== =========================================== ======================================
Q1 Q2 Q3 Q4 Q4 YTD Q1 Q2 Q3 Q3 YTD
================================ ======= ======= ======= ======= ======= ======== ======== ======== ========
Accommodation (1.5)% 0.1% (0.4)% 1.9% (0.1)% (79.1)% (76.6)% (55.2)% (70.1)%
Food & Beverage (0.4)% 1.6% 1.9% 2.1% 1.3% (80.1)% (72.6)% (53.9)% (68.9)%
UK total sales
growth (1.1)% 0.6% 0.3% 2.0% 0.4% (79.5)% (75.2)% (54.7)% (69.7)%
================================ ======= ======= ======= ======= ======= ======== ======== ======== ========
Regions (2.4)% (1.9)% (2.0)% 0.6% (1.6)% (79.2)% (73.2)% (48.0)% (66.7)%
London 1.7% 8.2% 4.8% 6.0% 5.2% (78.7)% (88.6)% (77.8)% (81.8)%
UK accom. sales
growth(1) (1.5)% 0.1% (0.4)% 1.9% (0.1)% (79.1)% (76.6)% (55.2)% (70.1)%
================================ ======= ======= ======= ======= ======= ======== ======== ======== ========
Accommodation (4.5)% (2.7)% (2.1)% 0.2% (2.4)% (79.4)% (77.1)% (56.0)% (70.7)%
Food & Beverage (2.1)% (0.2)% 0.4% 0.6% (0.3)% (80.5)% (72.8)% (54.4)% (69.3)%
UK LFL total
sales growth (3.6)% (1.9)% (1.3)% 0.4% (1.7)% (79.8)% (75.6)% (55.5)% (70.2)%
================================ ======= ======= ======= ======= ======= ======== ======== ======== ========
Regions (6.6)% (5.9)% (5.4)% (2.9)% (5.3)% (79.8)% (73.8)% (48.8)% (67.5)%
London (6.4)% 1.2% (0.2)% 0.5% (1.2)% (79.5)% (89.0)% (78.4)% (82.4)%
UK RevPAR growth(1) (6.3)% (4.3)% (4.1)% (2.0)% (4.3)% (79.7)% (77.2)% (55.9)% (70.9)%
================================ ======= ======= ======= ======= ======= ======== ======== ======== ========
Regions (6.3)% (5.6)% (4.9)% (2.3)% (5.0)% (79.7)% (73.9)% (49.1)% (67.5)%
London (4.3)% 1.7% 0.6% 1.6% (0.1)% (79.1)% (88.8)% (78.3)% (82.2)%
UK LFL RevPAR
growth(1) (6.0)% (4.2)% (3.6)% (1.3)% (3.9)% (79.6)% (77.2)% (56.2)% (70.9)%
-------------------------------- ------- ------- ------- ------- ------- -------- -------- -------- --------
Regions (1.9)% (0.9)% (1.2)% 0.8% (0.9)% (77.6)% (72.9)% (53.3)% (67.9)%
London 3.3% 7.1% 3.7% 3.6% 4.5% (79.3)% (87.4)% (80.0)% (82.4)%
M&E market total
sales growth(2) (0.4)% 1.2% 0.1% 1.7% 0.6% (78.1)% (76.5)% (61.0)% (71.8)%
-------------------------------- ------- ------- ------- ------- ------- -------- -------- -------- --------
Regions (5.0)% (4.0)% (3.6)% (1.4)% (3.6)% (77.7)% (72.6)% (52.9)% (67.7)%
London (0.7)% 4.7% 1.8% 0.9% 1.7% (79.8)% (87.6)% (80.4)% (82.7)%
M&E market total
RevPAR growth(2) (3.7)% (1.8)% (2.2)% (0.7)% (2.2)% (78.2)% (76.4)% (60.9)% (71.7)%
-------------------------------- ------- ------- ------- ------- ------- -------- -------- -------- --------
Notes:
1: FY20 Regions/London split restated to STR definition
2: STR data, M&E market includes Premier Inn
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