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(Sharecast News) - Premier Inn owner Whitbread backed its full-year outlook on Thursday as it said forward bookings in the UK remain ahead of last year, supported by peak leisure bookings.
In an update for the 13 weeks to 28 May, the company said group like-for-like sales rose 2% to 727m. It hailed a positive trading performance in both Premier Inn UK and Premier Inn Germany, partially offset by an expected reduction in UK food and beverage sales as a result of its 'Accelerating Growth Plan' (AGP) to transition a number of its branded restaurants to "a more efficient integrated offering".
In Premier Inn UK, total accommodation sales increased 3% versus last year, with total revenue per available room (RevPAR) up 2%. Whitbread said it continued to outperform the midscale and economy (M&E) market, with total accommodation sales growth up one percentage point and RevPAR growth of 1.2pp.
The company pointed to a strong performance in London, with total accommodation sales up 7% and RevPAR 4% higher. Regions were also ahead, with both total accommodation sales and RevPAR up 1%.
Food and beverage sales were in line with its expectations, down 5% and reflecting the impact of the AGP.
In Germany, total accommodation sales rose 13% in local currency, led by continued estate growth and "the benefit of our commercial initiatives", Whitbread said.
Total estate RevPAR was 63 and RevPAR of the group's more established hotels was 73, "significantly ahead" of the wider M&E market that was impacted by a lower number of high impact events this year.
Chief executive Dominic Paul said: "We delivered a strong and improved performance in the first quarter. In the UK, driven by the strength of our brand and commercial programme, total accommodation sales and RevPAR continued to grow ahead of the wider market. In Germany, demand strengthened through the quarter and with the opening of six new leasehold hotels, we drove double-digit accommodation sales growth and continued to outperform the wider market.
"Strong leisure bookings mean that our forward booked position is ahead of last year and we remain confident in the full year outlook. Whilst we expect the impact of business rates to remain in line with our previous FY27 guidance, we are continuing to press the UK Government for changes to FY28 and FY29."
Back in April, Whitbread announced a new five-year plan that involves the sale and leaseback of 1.5bn of its freehold properties, targeting 2bn of free cash flow, and the loss of around 3,800 jobs as it does away with its chain of branded restaurants.
It said at the time that the changes were being made in response to "significant" cost increases in the form of business rates and National Insurance, as well as the implied market discount to its inherent value.
Activist investor Corvex, which has a 7% stake in Whitbread, urged the company in May to put itself up for sale. It argued that the new five-year plan "doubled down on many of the core value-destructive components" it opposed in the original plan.
It said at the time: "Whitbread's persistent structural complexity and chronic misallocation of capital have delivered double-digit negative returns across every reasonable investment horizon - one, three, five, and ten years.
"We have raised these concerns directly and repeatedly with the Board and management, yet rather than undertaking the substantive strategic change the situation demands, they have remained anchored to the status quo. The inevitable consequence is clear: absent transformative action, Whitbread's shares will continue to trade at a significant and unjustified discount to intrinsic value."
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