Whitbread warns over dwindling bookings at Premier Inn hotel chain | Business

Whitbread, the owner of the UK’s biggest hotel brand, Premier Inn, has warned dwindling confidence among businesses and leisure travellers is dragging down bookings outside London.

Alison Brittain, the chief executive, said central London was still benefiting from international tourists but outside the capital the picture was grim, with both businesses and leisure travellers tightening their purse strings.

Whitbread is left with its budget hotel business and 692 restaurants, located next to Premier Inns, following the £3.9bn sale of its Costa Coffee chain to Coca-Cola, which has just been completed. It bought Costa from its founders for £20m in 1995.

Sales at Premier Inn rose 3.1% in central London, excluding new hotel openings, but fell 1% across the rest of the UK, including outer London, in the third quarter to 29 November. This resulted in a 0.2% dip for the UK as a whole. Overall like-for-like sales, including Beefeater, Brewers Fayre and other restaurants, dropped 0.6%.

Whitbread said 2019-20 profits before tax would be unchanged from 2018-19, implying a 5% downgrade to City forecasts. Analysts had been forecasting £469m for the year to end February 2020 and £444m for 2018-19. Excluding Costa, the group made profits of £426m in 2017-18.

The company is using some of the £3.8bn net proceeds to wipe out its pension deficit in one go and is also returning £500m to shareholders via a share buyback. It will pay £380m into the pension fund by March, putting it into surplus. The fund showed a deficit of £289m in March 2018.

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Faced with online rivals such as Airbnb, rising costs and a dip in UK consumer confidence, Whitbread is pushing into Germany, Europe’s biggest hotel market. It has one Premier Inn in Frankfurt with another one due to open in Hamburg next month. It is also acquiring 19 hotels from Foremost Hospitality Group, which will be converted into Premier Inns.

In the UK, Whitbread is targeting cash-strapped travellers with a new, no-frills hotel chain with small, pod-style rooms. The first Zip hotel will open in Cardiff in a few weeks and will charge £19 a night. This compares with £49 plus at Premier Inn and £69 a night at the firm’s more upmarket brand, Hub.

Whitbread is one of the UK’s oldest companies. It started life as a brewer in 1742 and grew into a sprawling leisure conglomerate that owned pubs, Pizza Hut, Marriott hotels and David Lloyd Leisure. All those assets have been sold.

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