Profits dive as Premier Inn and and Beefeater owner feels Brexit strain

By Jo Gilbert

Published: 22 October, 2019

One of the UK’s largest hospitality groups is showing signs of strain from drawn-out economic uncertainty, with profits nosediving 7%.

Whitbread, which owns hotel group Premiere Inn as well as run family-minded pub chains Beefeater, Brewers Fayre and Table Table, saw pre-tax profits and like-for-like accommodation sales fall considerably over the last six months.

Whitbread blames these struggles on “continued weak regional market conditions”. Basically, people are cutting back on holidays and business trips, and booking fewer hotels rooms.

The company also owned Costa Coffee until it sold it to Coca-Cola last year for £3.9bn – a move that could have contributed to the company’s 2019 H1 performance.

“Whilst there is no doubt that much thought went into the separation from Costa Coffee, it appears not so much thought went into the timing,” Steve Miley, senior market analyst at asktraders.com, told Harpers.

“Premier Inn is a UK hotel business that is dependant on British business travel. Amid elevated Brexit uncertainty, firms have cut back significantly on business travel costs, hitting Premier Inn and Whitbread hard.

“Brexit uncertainty needs to clear up before we see a real change of fortunes for Whitbread.”

From Whitbread’s side, chief executive Alison Brittain said “challenging” trading conditions in the UK regional market have made things difficult. Trading in London however remained “strong”.

The group is now looking to accelerate its position in Germany, where it has 7,280 rooms.

“Whilst the near-term market conditions in the UK remain uncertain, we have confidence in the long-term structural opportunities available in the domestic budget travel markets in the UK and Germany,” Brittain said.

Whitbread isn’t the only hotel operator to suffer from current market and economic uncertainty.

Julie Palmer, partner at Begbies Traynor via The Guardian, said “Whitbread isn’t alone, with a 29% increase in significant financial distress in the hotels and accommodation sector since the EU referendum in 2016.

“As demand for accommodation continues to fall and tourism is impacted by Brexit, holding on to its significant slice of the hospitality pie will be challenging."

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