Whitbread has warned of a £60mn increase in costs fuelled by soaring inflation as it reported a return to pre-tax profits for the first time since 2020.
The UK’s largest budget hotel operator said on Tuesday that a combination of “additional inflation” from labour, utilities, food and drink, as well as early investments in IT and marketing had led to higher costs. In June, Whitbread estimated full-year costs would amount to between £20mn and 30mn.
The Premier Inn owner anticipated lower profits margins in the second half of the year owing to the “normal seasonality and the phasing of investment and inflationary pressures”, the company said.
It posted pre-tax profits of £307.4mn in the 26 weeks to September, up from a £19.3mn loss over the same period last year, as demand levels remained robust. This was 40 per cent above 2019 levels.
Whitbread said it was pressing ahead with plans to increase its hotel footprint from 110,000 to 125,000 rooms, adding up to 2,000 rooms across its UK hotels and up to 2,500 rooms across its German estate.
“Despite macroeconomic uncertainties, our current trading performance is strong and our business has proven its resilience in previous downturns,” said Alison Brittain, Whitbread chief executive.
However, trading performance at its restaurant brands, which include Beefeater and Bar + Block Steakhouse, “continue to lag” pre-pandemic levels, the leisure group said. Food and beverage sales were 5 per cent down on 2019.
Brittain, who is departing the company early next year, said she remained “confident” about “full-year outlook and our ability to deliver long-term value for all our stakeholders”.
She welcomed the appointment of Rishi Sunak as the UK’s next prime minister after political uncertainty roiled markets in recent weeks.
“I’m very pleased that somebody with a strong sense of managing the economy is going to be in charge,” she said, adding that she was “looking forward to a period of stability and calm”.
The FTSE 100-listed company’s share price was down 1.8 per cent to £25.62 in early morning trading.