Staycation boost as hotel giant Premier Inn sees strong post-lockdown rebound

One of the UK's largest hotel chains is recovering quicker than expected and believes it will get back to pre-pandemic normality sometime next year.

Tuesday, 26th October 2021, 9:44 am
Updated Tuesday, 26th October 2021, 9:44 am

Whitbread said that Premier Inn, whose advertising is famously fronted by comedian Sir Lenny Henry, is beating its rivals on the road to recovery from one of history's most devastating moments for the hospitality sector.

It is outgrowing the market by more than a dozen percentage points, and is outdoing what its own bosses had predicted.

As a result, revenue per available room, a key measure for the hotel sector, will reach a full recovery at some point in 2022.

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Premier Inn has one of the UK's largest hotel estates, including this establishment at Edinburgh Park on the outskirts of the Scottish capital. Picture: Premier Inn/PA

During the six months to the end of August, RevPAR, as it is called in the industry, reached £32.13, nearly three times last year's £10.87.

Chief executive Alison Brittain said: "Whitbread traded significantly ahead of the market in the UK during the first half of the year, with our regional hotels trading ahead of pre-Covid-19 levels in the last six weeks of the half.

"This strong performance has continued into the second half, with sustained high levels of leisure demand and resilient demand from tradespeople."

She said that in Germany, where Whitbread will soon have 73 hotels, budget hotels are recovering faster than their more expensive rivals.

But the Whitbread boss added that there had been problems, as staff shortages in the UK have caused headaches.

"The operating environment during the summer and into autumn has been challenging largely as a result of our very high occupancy levels, market-wide supply chain issues and a tighter labour supply in the hospitality sector," Brittain said.

"Although we are not immune from these challenges, we are well placed to respond."

Revenue in the six months was 39 per cent lower than the same period two years earlier, but has more than doubled since last year, from £251 million to £662m.

Pre-tax loss narrowed from £725m last year to £19.3m, but is still far below the £220m profit made before the pandemic.

Nicholas Hyett, equity analyst at financial services group Hargreaves Lansdown, said: “It’s taken a while for Premier Inn owner Whitbread to regain momentum, but with trading ahead of pre-pandemic levels over the summer holidays and well ahead of the wider market the group looks well placed going into 2022.

“The pandemic has likely seen smaller operators forced to close, creating a gap into which Whitbread can expand in the UK. Meanwhile expansion in Germany is gathering speed with a pipeline that has the potential to more than double the current active estate.”

Richard Hunter, head of markets at investment platform Interactive Investor, noted: “The expected staycation rise in the UK due to restrictions on overseas travel has played into Whitbread’s hands, although a full return to pre-pandemic levels has yet to be achieved.

“There are also other factors at play, with Whitbread at the mercy of rising inflationary and supply chain pressures as with so many other companies. The hospitality industry is also particularly affected by a tight labour supply.”

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