Whitbread delivers double digit growth

Whitbread PLC, the power behind budget hotel brand Premier Inn have today announced their results for the six months ended 30th August 2012.  , delivering very positive news about the company’s continued success.

Financial Highlights

  • Total revenue up 14.2% to £1,018.1 million (2011/12: £891.3 million)
  • Costa underlying profit up 29.9% to £36.1 million (2011/12: £27.8 million)
  • Group like for like sales up 4.3%
  • Underlying profit before tax up 10.6% to £193.4 million (2011/12: £174.9 million)
  • Group return on capital increased to 13.7% (2011/12: 12.4%)
  • Whitbread Hotels and Restaurants underlying profit ip 8.5% to £181.3 million (2011/12: £167.1 million)
  • Premier Inn UK grew total sales by 12.9% with significant outperformance against its competitive set. Like for like sales up 3.7%.

Premier Inn opened 1591 net UK rooms taking total to 49,020 with secured pipeline of over 11,000 rooms.

Commenting on the results, Anthony Habgood, Chairman, said: “Whitbread is continuing on its rapid profitable organic growth path in difficult economic conditions. This is due to our unrelenting customer focus and the use of our strong balance sheet to invest in building powerful brands, developing our people and renewing our estate.”

While Chief Executive Andy Harrison continued: “Whitbread delivered a strong first half performance with total sales growth of 14.2% and underlying earnings per share growth of 13.1%, driven by our outperformance in a broadly flat market.  The combination of our strong sales growth and good returns drove an 11% increase in cash flow from operations to £285.3 million. This created the financial capacity to continue investing in our brands and the quality and breadth of our estate, finance our organic growth and the 11.4% increase in the interim dividend.  Premier Inn delivered a 2.4% growth in revpar during the first half, compared to a decline of 3.6% in the Midscale and Economy sector. As expected, the London hotel market is settling post the Olympics and we wait for a clearer trend to emerge. The regional hotel market has continued its revpar decline. More generally, our consumer market context continues to be broadly flat. Against this background we expect to continue to outperform our competitors and like for like sales growth to be more moderate than the high levels achieved in the first half.  We expect continuing rapid growth in total sales on track towards our five year milestones. Premier Inn is benefitting from a structural shift in the UK towards strong branded hotels. Costa’s growth is supported by its leading UK position in a robust category, together with exciting international opportunities. This growth in total sales, coupled with our clear focus on good financial returns, is creating substantial value.”

So here’s the question to Hotel Insight followers – what do you think the reasons are for Premier Inn’s continued strong growth and success in the UK?  The right brand product at the right price? Quality? Strong marketing?  You tell me – please leave your comments below.

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2 thoughts on “Whitbread delivers double digit growth

  1. It’s a combination of knowing what your going to get (good, consistent product) and at a fair price – this is clearly driving Premier Inn’s success. However, more and more I am finding that rates for Premier Inn hotels in major cities, especially London, are no longer “budget” and are in fact the same as other 3 star hotels on offer. I think Premier Inn need to be careful not to get a reputation for this, as it could really de-value their brand message. For instance, I have just been trying to book a one night stay in London and the first hotel I see is £211 per night. That is not budget, so to keep banging on about being the “best budget hotel chain” is starting to grate on me. Otherwise, its a great product that people know and trust. And great to see a British company making money, expanding and creating jobs.

  2. I agree with the previous commnent entirely. I started booking a particular Premier Inn hotel for a client on business 4 years ago and the average rate was £45. 4 years on, the average rate is £108. Budget? That’s greedy – the products not improved, it’s stayed the same. No wonder they are making so much money,

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