REG - Whitbread PLC - Q3 FY22 Trading Update

WhitbreadAnnouncement

12/01/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220112:nRSL1308Ya&default-theme=true

RNS Number : 1308Y  Whitbread PLC  12 January 2022

Q3 FY22 Trading Update

 

Strong revenue performance in Q3 and continued outperformance in the UK

 

Throughout this release all percentage growth comparisons are made on a
two-year basis, comparing the current year (Q3 FY22) performance for the 13
weeks to 25 November 2021 to the same period in FY20 (13 weeks to 28 November
2019), with FY20 being the last financial period before the onset of the
COVID-19 crisis

 

Q3 summary

 

·      Continued market outperformance in the UK with Premier Inn total
accommodation sales 10.6% ahead of FY20 and like-for-like UK accommodation
sales 5.5% ahead. Total UK accommodation sales growth was 14.9pp ahead of the
M&E market(1) driven by strong leisure demand and recovering business
demand

·      Total UK sales were 3.1% ahead of FY20, with total food and
beverage sales down 11.1%

·      The Group's 32 open hotels in Germany achieved occupancy levels
of 59.9%, up from 47.5% in Q2, in line with the market

·      The Group was operating cashflow positive in the period to the
end of December, and retains a strong balance sheet and liquidity position,
with net cash of £120.5m. This strong balance sheet position is enabling
investment in our comprehensive growth strategy

Current trading (six weeks to 6 January 2022) and outlook

·      Resilient trading in the UK despite the onset of the Omicron
COVID-19 variant with total UK accommodation sales growth 5.1% ahead of FY20,
representing a 20.8pp outperformance of the M&E market(2)

·      We maintain our expectation that Premier Inn UK like-for-like
RevPAR run rates will recover to pre COVID-19 levels during 2022

·      Sector cost inflation in FY23 expected to be above historic
average levels. The Group expects to be able to largely offset these higher
levels of inflation through cost efficiencies, estate growth and higher price
(ARR)

·      Government lockdown restrictions are acting as a headwind in the
German market, with occupancy levels reducing to 36% in the six-week period

 

Comment from Alison Brittain, CEO:

"Q3 represented another strong performance in the UK with Premier Inn
continuing to trade significantly ahead of the market. High levels of leisure
demand and improving business demand helped maintain like-for-like
accommodation sales ahead of pre COVID-19 levels. UK accommodation sales
remained resilient in December, albeit softening as we moved through the month
and into the festive period as a result of the onset of the Omicron COVID-19
variant. Whilst our hotel performance was excellent, the value pub and
restaurant sector in which we operate remains more challenging.

 

In the UK, we will grow through the competitive advantages of having by far
the largest network of hotels and operating the number one hotel brand,
combined with our direct distribution, best-in-class operating model, broad
customer reach and underpinned by our market-leading sustainability programme.
These unique attributes, combined with our yield management, estate growth,
and cost efficiency programme, ensure we are in a far stronger position than
others to offset inflationary headwinds and return to our pre COVID-19
margins.

 

In Germany, our open hotel estate now stands at 32 hotels, all now branded
Premier Inn, with a further 43 hotels in the pipeline. Whilst the current
German Government COVID-19 restrictions are a significant drag on market
demand, the opportunity for the Group to create value in Germany remains
compelling. We will continue to take opportunities to grow the estate at pace,
and our commitment to that market will be substantial, delivering attractive
long-term returns."

 

 

Q3 Financial Performance

 

The UK year-to-date performance reflects the impact of leisure overnight stays
only being permitted in hotels from 17 May 2021 and restaurants only being
permitted to open for indoor dining on the same date.

 

Financial highlights

 

                              Q3                      Q3 YTD
                              UK       Germany  Total       UK       Germany  Total
 Sales growth:
    Accommodation             10.6%    219.0%   12.8%       (18.4)%  214.8%   (16.9)%
    Food & beverage           (11.1)%  253.8%   (10.0)%     (38.1)%  211.7%   (37.4)%
    Total                     3.1%     224.8%   5.0%        (25.3)%  214.2%   (24.0)%
 Like-for-like sales growth:
    Accommodation             5.5%     (33.3)%  5.1%        (21.9)%  (40.8)%  (22.0)%
    Food & beverage           (13.4)%  (22.1)%  (13.5)%     (39.6)%  (43.4)%  (39.6)%
    Total                     (1.0)%   (31.5)%  (1.3)%      (28.1)%  (41.3)%  (28.1)%

 

Current trading - six weeks to 6 January 2022

 

The emergence of the Omicron COVID-19 variant dampened demand in December and
through the festive period, however Premier Inn UK total accommodation sales
continued to outperform the market (+20.8pp(2)) with total accommodation sales
5.1% ahead of FY20 and occupancy levels at 65.7%. Total UK sales were 4.4%
behind the same period in FY20 with total food and beverage sales 17.2% down,
with recent weeks adversely impacted by the Omicron variant and increased
Government restrictions on eating-out in Scotland, Wales and Northern Ireland.
Increased Government COVID-19 restrictions in Germany are acting as a
significant market drag, with Premier Inn occupancy levels at 36.4%, down from
59.9% in Q3, however still in-line with the market.

 

Outlook

 

In the UK, January and February are traditionally our quietest months with low
levels of forward bookings as we enter the new calendar year. While the impact
of the Omicron COVID-19 variant has resulted in a softening of hotel bookings
in recent weeks, it remains too early to assess what the impact on sales will
be for the rest of this financial year. However as we look forward into FY23,
and in the absence of any further material COVID-19 restrictions, we maintain
our expectation that Premier Inn UK like-for-like RevPAR run rates will
recover to pre COVID-19 levels during 2022. In our restaurants, we expect the
rollout of new menus, combined with targeted marketing initiatives, to help
drive an improvement in food and beverage sales as we move into the next
financial year.

 

In Germany, the Government lockdown restrictions are expected to last
throughout the winter and into FY23, adversely impacting market demand. Whilst
this will dampen the trading performance of our hotel estate in the short term
and impact profits in FY22, there is no change in our view of the significant
long-term value creation opportunity for Premier Inn in Germany.

Our latest view of the expected sector inflation rate in FY23 is of an average
rate of c7-8% that could impact approximately £1.4bn of our cost base.
However, visibility remains limited and this level of inflation may well
change as we move into the next financial year, and before we are required to
fully contract for supplies. Our cost efficiency programme, our estate growth,
and the strong market ARR evidenced through this cycle, present a significant
opportunity for the Group to largely offset these potential additional
inflationary cost headwinds.

 

Market-wide supply chain challenges, and potentially softer trading in January
and February, mean we have delayed around £20m of our previously guided
P&L marketing and refurbishment investment plans this year, and our
capital expenditure will now be around £275m.

Notes:

1: STR data, full inventory basis, 27 August 2021 to 25 November 2021, M&E
market excludes Premier Inn

2: STR data, full inventory basis, 26 November 2021 to 30 December 2021,
M&E market excludes Premier Inn

 

For more information please contact:

Investor Relations -  Whitbread
 
 
     investorrelations@whitbread.com
(mailto:investorrelations@whitbread.com)

Paul Tymms, Director of Investor Relations
                                  paul.tymms@whitbread.com

Abigail Cammack, Investor Relations Manager
 
    abigail.cammack@whitbread.com

 

Media -
Tulchan
          whitbread@tulchangroup.com

Jessica Reid / Alison Lygo                                                                                           +44 (0) 20 7353 4200

 

 

A live Q&A teleconference for investors and analysts will be held at
9:00am GMT on 12 January 2022. Details to join are noted below. An on-demand
version of this will be made available on the website
(www.whitbread.com/investors/results-reports-and-presentations
(http://www.whitbread.com/investors/results-reports-and-presentations) )
shortly after.

 

Q&A teleconference participant dial-in numbers:

Start time - 9:00am GMT

United Kingdom (Local): 020 3936 2999

All other locations: +44 203 936 2999

Participant Access Code: 096761

 

 

 

 

 

Appendix

 

 

1)   Premier Inn UK key performance indicators

 

                                       Q1       Q2       Q3       Q3 YTD
 London
 Occupancy (full inventory)            32.9%    70.7%    77.2%    60.4%
 Average room rate                     £41.35   £56.77   £75.27   £61.95
 Revenue per available room            £13.62   £40.16   £58.12   £37.42
 Total accommodation sales growth      (77.4)%  (43.5)%  (18.9)%  (44.7)%

 Regions
 Occupancy (full inventory)            44.0%    81.2%    82.2%    69.3%
 Average room rate                     £40.80   £59.11   £62.97   £56.84
 Revenue per available room            £17.97   £47.99   £51.76   £39.41
 Total accommodation sales growth      (56.3)%  (0.2)%   19.9%    (10.7)%

 Total
 Occupancy (full inventory)            42.2%    79.5%    81.4%    67.9%
 Average room rate                     £40.87   £58.77   £64.84   £57.56
 Revenue per available room            £17.27   £46.75   £52.78   £39.09
 Total accommodation sales growth      (60.9)%  (9.6)%   10.6%    (18.4)%

 Outperformance vs M&E market(1)       10.9 pp  13.9 pp  14.9 pp  13.3 pp

 F&B
 Total food and beverage sales growth  (86.0)%  (18.1)%  (11.1)%  (38.1)%

 Total sales growth                    (70.1)%  (12.5)%  3.1%     (25.3)%

 

 

2)   Premier Inn Germany key performance indicators

 

                                       Q1       Q2       Q3       Q3 YTD
 Occupancy (full inventory)            14.6%    47.5%    59.9%    42.4%
 Average room rate                     £32.42   £37.60   £43.99   £40.42
 Revenue per available room            £4.75    £17.85   £26.37   £17.12
 Total accommodation sales growth      8.8%     447.4%   219.0%   214.8%
 Total food and beverage sales growth  7.7%     307.3%   253.8%   211.7%
 Total sales growth                    8.6%     418.1%   224.8%   214.2%

 

 

 

 

3)   UK Quarterly sales & RevPAR growth versus FY20

 

                                                       FY21                                         FY22
                                                       Q1       Q2       Q3       Q4       FY       Q1       Q2       Q3       Q3 YTD
                                                       %        %        %        %        %        %        %        %        %
 Accommodation                                         (79.1)%  (77.1)%  (55.4)%  (70.3)%  (70.4)%  (60.9)%  (9.6)%   10.6%    (18.4)%
 F&B                                                   (80.1)%  (72.6)%  (53.9)%  (91.9)%  (74.4)%  (86.0)%  (18.1)%  (11.1)%  (38.1)%
 Premier Inn UK total sales growth                     (79.5)%  (75.6)%  (54.9)%  (79.0)%  (71.8)%  (70.1)%  (12.5)%  3.1%     (25.3)%

 Regions                                               (79.2)%  (73.8)%  (48.2)%  (66.1)%  (66.8)%  (56.3)%  (0.2)%   19.9%    (10.7)%
 London                                                (78.7)%  (88.9)%  (78.0)%  (83.5)%  (82.3)%  (77.4)%  (43.5)%  (18.9)%  (44.7)%
 Premier Inn UK accommodation sales growth             (79.1)%  (77.1)%  (55.4)%  (70.3)%  (70.4)%  (60.9)%  (9.6)%   10.6%    (18.4)%

 Accommodation                                         (79.4)%  (77.6)%  (56.2)%  (70.7)%  (70.9)%  (62.1)%  (13.7)%  5.5%     (21.9)%
 F&B                                                   (80.5)%  (72.8)%  (54.3)%  (92.0)%  (74.7)%  (86.2)%  (20.3)%  (13.4)%  (39.6)%
 Premier Inn UK LFL sales growth                       (79.8)%  (76.0)%  (55.5)%  (79.3)%  (72.3)%  (70.9)%  (15.9)%  (1.0)%   (28.1)%

 Regions                                               (79.8)%  (74.4)%  (49.2)%  (66.6)%  (67.5)%  (57.8)%  (4.8)%   13.9%    (14.6)%
 London                                                (79.5)%  (89.3)%  (78.6)%  (84.0)%  (82.9)%  (78.8)%  (47.0)%  (24.5)%  (48.3)%
 Total RevPAR growth                                   (79.7)%  (77.7)%  (56.3)%  (70.8)%  (71.1)%  (62.4)%  (14.0)%  4.7%     (22.2)%

 Regions                                               (79.7)%  (74.5)%  (49.4)%  (66.6)%  (67.6)%  (57.9)%  (5.6)%   13.5%    (15.3)%
 London                                                (79.1)%  (89.1)%  (78.6)%  (83.8)%  (82.7)%  (78.4)%  (46.5)%  (23.6)%  (47.7)%
 LFL RevPAR growth                                     (79.6)%  (77.7)%  (56.4)%  (70.8)%  (71.0)%  (62.4)%  (14.5)%  4.5%     (22.6)%

 Regions                                               (78.3)%  (73.9)%  (53.5)%  (71.6)%  (69.2)%  (63.8)%  (7.0)%   12.8%    (17.7)%
 London                                                (79.6)%  (87.6)%  (79.9)%  (83.5)%  (82.7)%  (80.5)%  (52.8)%  (29.1)%  (52.8)%
 Midscale & Economy market total sales growth(2)       (78.6)%  (77.4)%  (61.0)%  (75.0)%  (72.8)%  (68.0)%  (18.6)%  1.0%     (27.0)%

 Regions                                               (78.4)%  (73.7)%  (53.0)%  (71.2)%  (68.9)%  (64.1)%  (7.9)%   12.1%    (18.3)%
 London                                                (79.9)%  (87.8)%  (80.1)%  (83.6)%  (82.9)%  (80.9)%  (53.9)%  (30.8)%  (53.8)%
 Midscale & Economy market total RevPAR growth(2)      (78.7)%  (77.3)%  (60.7)%  (74.7)%  (72.7)%  (68.3)%  (19.6)%  (0.1)%   (27.7)%

 

Notes:

1: STR data, full inventory basis, 26 February 2021 to 25 November 2021,
M&E market excludes Premier Inn

2: STR data, M&E market includes Premier Inn

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTBIGDBGDBDGDB