Yahoo Finance Premier Inn owner Whitbread cuts 1,500 jobs amid COVID-19 restructuring
Premier Inn owner Whitbread (WTB.L) has cut 1,500 jobs as part of restructuring efforts at its hotel and restaurant operations following coronavirus-related sales losses.
In its third quarter trading update on Thursday, the company highlighted that these losses were to “ensure our cost base is reflective of the current demand environment” and far less than the 6,000 redundancies that were previously earmarked. This was partly due to cost savings as more colleagues accepted a reduction in maximum contracted hours.
Shares (WTB.L) were leading FTSE (^FTSE) gains on Thursday, up 2.4% at around 9am in London.
Group sales fell 54.3% in the third quarter as people dined out far less and avoided staying at hotels amid the pandemic.
The looming COVID-19 restricts have created “challenging hotel market conditions” the business said, with total UK accommodation sales down 55.2% with occupancy at 49.3%.
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Though, occupancy had picked up ahead of the November lockdown, exceeding 50% when compared with both September and October, and also outperforming the rest of the market.
Business travel demand also improved in the first half of December for the business, alongside leisure travel, which allowed Whitbread keep the majority of its UK hotels open during that period. Demand then fell as the government imposed tiered restrictions in the second half of December and into the New Year.
In Germany, 21 of the business’ 29 operational hotels also remained open during this period but under severe restrictions.
Despite sluggishness amid the COVID-19 pandemic, the business said it is “well positioned to continue its outperformance versus the market and to emerge in a strong position in the long-term.”
“With the vaccination programme underway, we look forward to the potential gradual relaxation of restrictions from spring, business and leisure confidence returning, and our market recovering over the rest of the year,” added Alison Brittain, chief executive.
The company holds a net cash position at 31 December 2020 of approximately £40m ($1.37m) compared with £196.4m at the end of first half of the year.
“Whitbread’s balance sheet continues to weaken, but this is to be expected as the business can do nothing about the lockdowns,” William Ryder, Equity Analyst at Hargreaves Lansdown. “The group still has enough cash and credit available at the moment, so we’re not worried in the short term. Whitbread just needs to be ready to power back up quickly when conditions allow.”
The UK hotel industry has seen a slump in demand in the wake of the pandemic, with accounting firm PricewaterhouseCoopers saying it could take four years to return to 2019 levels of business, even if vaccines help the industry recover from the major losses.
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