Yahoo Finance Premier Inn owner Whitbread swings to £1bn loss amid Covid lockdowns
The Premier Inn owner Whitbread has reported a £1bn annual loss as sales fell by almost three-quarters as a result of Covid-19 lockdowns, but the hospitality group said summer bookings to seaside and mountain resorts had surged.
As the pandemic forced the closure of venues across the group, which also includes the Beefeater and Brewers Fayre pub-restaurant chains, revenues plunged 71% to £589m in what was “one of the most challenging years” in its 279-year history, according to the chief executive, Alison Brittain.
The lack of business led to a pretax loss of more than £1bn for the year to 25 February, compared with a £280m profit the year before. It includes a £348m charge as Whitbread was forced to write down the value of German acquisitions, property, equipment and other assets, because of the Covid-19 situation and its impact on current and future growth rates.
The UK’s biggest hotel operator said 92% of its 820 UK hotels were open to guests staying for essential business travel while all of its restaurants remain closed for indoor dining. It expects to be able to reopen its hotels and restaurants fully from 17 May, when Covid-19 restrictions are due to be relaxed under the government’s roadmap.
With bookings booming for Skegness, Scarborough, Brighton, Cornwall, south Wales, the Lake District and the Scottish highlands, Premier Inn hotels on the coast, in the mountains and some historic cities – 15% of the total – are expected to be full over the summer, similar to last year when Covid restrictions were temporarily relaxed. Some customers are booking further ahead, with all hotels in and around Cheltenham fully booked within 48 hours of the 2022 horse jump racing event going on sale.
“We’re quite heavily booked – I won’t go as far as to say that there isn’t a room left but when we get to the summer, we’ll be full in coastal resorts – ‘seaside bucket and spade or place in the mountains’ locations,” Brittain said.
She stressed that sporting events, weddings and concerts also needed to return for the hotel business to make a full recovery, and said she was in favour of vaccine passports for large events where social distancing was not feasible.
Whitbread has continued to get bookings from tradespeople, albeit below pre-pandemic levels, and expects to see a gradual recovery, while demand from office workers will take longer to come back. People who have been working from home are expected to start returning to the office from September, but many companies are talking about a mix of home and office working.
“The idea that all of it [white collar travel] will disappear is overdone. People are looking forward to hybrid working,” Brittain said, noting that Premier Inn does not host conferences and other corporate events – an area that could take years to recover.
Whitbread was forced to shut its hotels during the first UK coronavirus lockdown a year ago and reopened from July, followed by further closures later in the year and in early 2021 due to new lockdowns. Premier Inn hotels were more than 50% full in September and October, but that fell to 23% in January and 29% in February.
To encourage customers back, Whitbread has started a major marketing push, Rest Easy, with the voice of the comedian Sir Lenny Henry, and begun the rollout of 2,000 Premier Plus rooms this year, with faster wifi and more perks, which was paused last year.
To get through the crisis, Whitbread raised £1bn from investors in June and has cut 1,500 jobs – fewer than expected – as part of £100m in cost savings over three years.
The company forecast bigger losses, into 2023, in Germany, where 18 of its 30 hotels are open to essential business travel at the moment, with a further 42 Premier Inns in the pipeline following an acquisition. It also plans to push ahead with more hotel openings in the UK in the coming years, while smaller operators are struggling.
Alasdair McKinnon, fund manager of the Scottish Investment Trust, which holds Whitbread shares, said: “Lockdowns made last year one of the toughest ever for the hotel sector. Not all will survive and even fewer will thrive in the way that Whitbread is poised to.
“Consumers have been starved of experiences and we believe that they will jump at the chance to travel when it is safe to do so. We could be on the verge of a staycation boom.”
