Yahoo Finance FTSE 100: Premier Inn-owner Whitbread launches £300m share buyback as profits rise
Premier Inn owner Whitbread (WTB.L) saw full-year earnings surge on the back of strong demand for hotel rooms post-pandemic as it unveiled a £300m ($374m) share buyback.
Revenue reached £2.6bn, up 54% from £1.7bn last year. Some £2.5bn of that came from the Premier Inn UK division.
The company, which also owns steakhouses Beefeater and Bar+Block, reported adjusted profit before tax of £413m for the year to 2 March, compared to a loss of £15.8m a year earlier.
The result topped the pre-pandemic annual profit level of £358m achieved in 2019-20.
The group was also bolstered by the opening of new hotels in Germany and the UK.
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As the market fully reopened post-COVID, UK Premier Inn saw room rentals jump 55% ahead of its full year 2022 and 37% ahead of 2020’s total.
“These are a fantastic set of results,” CEO Dominic Paul said. “Whilst the recovery in market demand in conjunction with a structural decline in the independent sector has provided a helpful backdrop, it is the combination of our own initiatives and our clearly differentiated business model that has sustained our brand strength and delivered such an impressive operational and financial performance.”
Looking forward, the group expects to open up to 2,000 rooms in the UK in the current financial year as part of a pipeline of 7,400. It also plans to open 1,000 to 1,500 rooms in Germany.
Revenue per available room (RevPAR) reached £60.98 with occupancy hitting 81%. The average room rate was £74.94 in the seven weeks to 20 April.
Food and beverage sales across its restaurant chains were up 40% ahead of last year figures, however lagged behind pre-pandemic levels.
Whitbread also upped its final dividend to 49.8p, at a cost of £100m, to more than double the level a year ago.
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Mark Crouch, analyst at eToro, said: “Whitbread has smashed earnings and revenue expectations for its 2023 fiscal year following an impressive year of growth. While the firm’s food and beverage brands are yet to recover their pre-pandemic volumes, Premier Inn has well exceeded them and is significantly outpacing its segment rivals.
“When household finances are tight, people want value, but not at the expense of quality. Premier Inn provides both of this, which helps explain why it has performed so spectacularly well over the past 12 months, despite the tough operating background.”
Premier Inn operates across 840 hotels in the UK, and has over 120 sites across London.
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