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Premier Inn raises room rates to combat 8% inflation

·2-min read
 (Whitbread)
(Whitbread)

Premier Inn owner Whitbread will raise room rates to counter sector inflation of up to 8% as the hospitality industry confronts staff shortages and supply chain snags amid lingering fallout from the pandemic.

Around £1.4 billion of the FTSE 100 group’s cost base — from wages and power bills to food — is vulnerable to looming price hikes but the firm hopes to largely offset those costs through higher prices, efficiency savings and estate growth.

Around 10% of its 30,000 employees are currently off work in the latest sign of the staffing crisis still being caused by the pandemic.

The company, which also owns the Brewers Fayre and Beefeater chains, saw total UK sales down 4.4% in the six weeks to January 6 compared with the same period in pre-pandemic 2020, dragged lower by a 17.2% slump in food and drink revenues.

Tough lockdown measures in Germany also took a toll, with occupancy levels plunging 36% across its network of 32 hotels there.

Whitbread said it is too early to assess the impact of the Omicron variant on trade over the full year, with January and February already typically the quietest months.

It also revealed it has delayed a £20 million spend on room refurbs and marketing amid the uncertainty.

But the group remains hopeful that Premier Inn hotel trading will recover to pre-Covid levels soon: an optimism which calmed investors and saw its share price hold firm despite the gloomy outlook.

CEO Alison Brittain said: “UK accommodation sales remained resilient in December, albeit softening as we moved through the month as a result of the onset of Omicron.

“While our hotel performance was excellent, the value pub and restaurant sector in which we operate remains more challenging.”

It said UK accommodation sales rose 5.5%, while food and drink sales fell 11.1% in the quarter to November 25.

Mamta Valechha, equity research analyst at Quilter Cheviot, said: “Cost inflation is expected to run at the rate of 7-8%, however Whitbread expects to largely offset this.

“For investors, Whitbread can be viewed as a recovery play and we have conviction Premier Inn will emerge from the crisis stronger.”

Shares were steady, up 28p to 3227p.

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