Whitbread reports Q3 sales halve & 1,500 job losses

Whitbread's latest financial performance for Q3 reflects the impact of the ongoing COVID-19 Government restrictions in the UK and Germany, and has seen the group make 1,500 staff redundant.

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, its operations team responded quickly to changes in these restrictions, enabling the majority of the hotel estate to remain open, and combined with its strong brand, direct distribution and best-in-class operating model, drove an 8.9pp outperformance of the midscale and economy market1. Premier Inn’s share of the total hotel market by revenue grew by 4.1pp to 11.4%.

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 its 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.

The group continues 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 indicated (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.

CEO Alison Brittain said, “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.”