Whitbread Sales Gain as Premier Inn Lures Businesses, Costa Coffee Surges

Whitbread Plc, the U.K.’s largest hotel and restaurant operator, said first-half sales increased 14 percent as more businesses used Premier Inn budget hotels.

Revenue at Premier Inn rose 15 percent in the 24 weeks ended Aug. 19, or 11 percent on a like-for-like basis, the Dunstable, England-based company said today. Sales to customers with business accounts increased more than 20 percent.

Whitbread gets about 44 percent of revenue from Premier Inn, which offers rooms from as little as 29 pounds ($45) a night. Occupancy at U.K. hotels was the highest of Europe’s biggest markets in July at almost 81 percent, up 5.8 percentage points from a year earlier, according to researcher STR Global.

“Employees are being told to stay in cheaper hotels and Premier Inn will benefit from that,” said Jeffrey Harwood, an analyst at Oriel Securities in London. “The company relies less on government business, so it is well-placed to win business from the public sector as spending cuts are implemented.”

Like-for-like occupancy was 79 percent in the first half, up 9.5 percentage points, Whitbread said. Premier Inn is the U.K.’s biggest budget lodging chain with about 42,500 rooms spanning 600 hotels, and has 11,000 more in the pipeline.

Sales at Whitbread’s Costa Coffee unit rose 28 percent in the first half, or 8.3 percent on a like-for-like basis.

Analysts estimate full-year pretax profit of about 265 million pounds, Whitbread Finance Director Christopher Rogers said on a conference call today. The company is “comfortable” with its own expectations, he said, without elaborating.

Sales growth will slow in the second half because comparisons will be more difficult given the recovery in the fourth quarter of last year, Rogers said.

Whitbread fell 7 pence, or 0.5 percent, to 1,505 pence at 9:06 a.m. in London, trimming the shares’ gain this year to 6.9 percent. InterContinental Hotels Group Plc, owner of the Holiday Inn chain, has gained 19 percent in the same period.

To contact the reporter on this story: Armorel Kenna in Milan at akenna@bloomberg.net

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