- The company said it was buoyed by limited supply in the UK hotel sector
- Whitbread said profits rose to £293 million in the six months to August
- Trade was supported by the ongoing recovery in leisure and business travel
Premier Inn’s parent company has launched another £300m share buyback after first-half profits rose by a quarter on record demand.
FTSE 100-listed Whitbread’s statutory profit rose to £293 million in the six months to August, compared with £234 million in the same period last year.
The strong result saw the company plan another £300m share buyback, having completed one just earlier this month.
The group has also announced a 40 per cent increase in its interim dividend to 34.1 pence per share, to be paid in early December.
Whitbread shares were the top performer on the FTSE 100 on Wednesday morning, rising 4 per cent to £34.55, having risen by around a third in the last 12 months.
Sweet dreams: Premier Inn owner Whitbread has launched a £300m share buyback
Sales at Whitbread’s much larger domestic arm rose 14 per cent to £1.48 billion in the period, with trading supported by the ongoing recovery in holiday and business travel following the end of Covid-related restrictions.
Occupancy rates remained relatively consistent, but the company’s average rooms cost £84.13 per night, compared to £73.54 last year.
The hotel giant also said it was buoyed by limited supply in the UK accommodation sector, which is not expected to return to pre-pandemic volumes for another five years.
Strong hotel demand in the UK and Germany helped Whitbread’s food and drink sales rise 12 per cent to £408.8 million.
Although the group continued to suffer from persistent inflationary pressures, high levels of hotel bookings combined with massive cost savings helped adjusted pre-tax profits beat expectations, growing by 44 per cent to £391m.
Whitbread CEO Dominic Paul said: “The group is in excellent shape, trading well and has significant growth potential, both in the UK and Germany.”
“Based on our strong performance to date and an encouraging future position, we remain optimistic about the full year outlook and are confident about the future.”
Demand has been healthy since September, the group added, with booked sales in the Premier Inn UK segment in the third and fourth quarters “significantly above” last year.
Much of Whitbread’s growth in recent years has been driven by a decline in independent hotels, particularly since the start of the pandemic, partly due to rising inflation and interest rates.
The cost of living crisis has also done little to deter consumers from vacationing, instead driving many to seek cheaper accommodation.
However, Julie Palmer, partner at Begbies Traynor, warned that Whitbread “needs to sleep with one eye open” as its food offering “continues to lag behind Premier Inn’s success and remains more exposed to pressure from the wider market”.
She added: “For now, it is clear that the hospitality giant remains well insulated against external cost pressures, with its differentiated model and strong balance sheet providing important protection against headwinds that smaller players find difficult to withstand.”