Premier Inn owner Whitbread sounds alarm on Brexit as hotel bookings stall

Premier Inn owner Whitbread spooked the City on Tuesday as chief executive Alison Brittain delivered a stark warning on Brexit turmoil sapping business confidence and hotel bookings.

The firm is hugely exposed to the hotels market after completing a £3.9 billion sale of its Costa Coffee arm to Coca-Cola in January but says the political gloom has chilled business.

Although Premier Inn’s UK sales rose 3.5% in the year to February 28, comparable sales slumped 0.6%.

The weakness increased in March and April as firms faced up to the potential threat of a no-deal Brexit, the firm added.

Business outside London was particularly affected, “coinciding with an acute period of political and economic uncertainty in the UK”.

Brittain said: “Business confidence has been dropping over the course of the last year. Many people tried to lock down their business travel [in recent months].

“We did have a large number of businesses not travelling at all.”

She cautioned: “It is too early to know how business confidence and its impact on the market will evolve”.

It is the latest disappointment for shareholders after the firm said in January profits for the year to February 2020 will be flat amid market “uncertainty”.

Shares in Whitbread, which opened 23 hotels in the UK and expanded its estate to more than 76,000 rooms last year, fell 147p, or more than 3%, to 4607p.

The firm said it is still committed to more hotel openings in Britain and it is upbeat about growth potential in Germany. It also confirmed that a £2 billion share buyback will go ahead as planned.

Statutory pre-tax profits fell 39% to £260 million in the year.

This was hit by costs linked to the Costa disposal.

Premier Inn underlying pre-tax profits rose by 1.2% to £438 million and revenue was up by 2.1% to over £2 billion.

Analysts at Bernstein said the figures marked a slight miss to consensus forecasts but they were more concerned that the guidance for next year’s profits had not been reiterated.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Shorn of Costa, there’s less of a caffeine buzz about Whitbread, but the German venture promises to add a fair share of growth potential to the mix.”