- Germany guidance maintained
- FY2024 occupancy at 85 per cent
Shares in Premier Inn owner Whitbread (WTB) are trading close to their post-pandemic highs after the company released a buoyant set of Q3 figures. The group says it has continued to outperform rivals in what’s known as the “midscale and economy” segment of the hotel market.
Its revenue per available room (revPAR) figure for the 13 weeks to the end of November 2023 was up 9 per cent on the prior year, while its total accommodation sales grew by 11 per cent. Management remains confident in the company’s ability to reach its previously-issued FY2025 targets, despite ongoing macro pressures in the UK.
Whitbread anticipates net cost inflation of between 3 and 4 per cent in its home market – and it’s therefore targeting £40mn-£50mn of efficiencies across the upcoming financial year. Analysts at Shore Capital estimate that the group will need to record like-for-like revenue growth of around 3 per cent to offset the impacts of inflation.
This should, however, be wholly attainable. Occupancy across FY2024 (which ends in February) currently sits at 85 per cent – meaning that Whitbread’s rooms are utilised at a favourable rate.
The German market, where the company operates 58 hotels, is more of a challenge. The group “remains comfortable” with prior guidance of a full-year pre tax loss of between £40 and £50mn, although it expects to break even on a run-rate basis in the current calendar year.
According to Peel Hunt analysts, management is getting to grips with the “idiosyncrasies” of Germany’s hotel sector, particularly with the surges in demand that surround major trade fairs. “RevPAR performance in line with the market implies they are getting the hang of it,” the analysts said.
All told, Whitbread’s challenges look surmountable – particularly given its market-leading status at home.
Last IC view: Buy, 3,442p, 18 October 2023
