Whitbread boosted by growing Premier Inn, Costa demand

By Neil Maidment

LONDON, Dec 10 (Reuters) - Whitbread (LSE: WTB.L - news) said it was on track to meet full-year expectations as growing demand at its Premier Inn hotels and Costa Coffee chains helped deliver a strong rise in third quarter sales.

Britain's biggest hotel and coffee shop operator, which also runs pub restaurants such as Brewers Fayre, on Tuesday said group like-for-like sales rose 4.3 percent in the 13 weeks to Nov. 28, up from a 2.8 percent rise in the first half.

"The key drivers of Whitbread's recent success, Costa (NasdaqGM: ATX - news) and Premier Inn, continue to power ahead, whilst an improvement in fortunes at its restaurant business and some overseas progress all contribute to a promising update," Hargreaves Lansdown (LSE: HL.L - news) analyst Richard Hunter said.

Whitbread, which makes almost all its sales in Britain, has expanded rapidly due to demand from cost-conscious customers for affordable hotels and a rising popularity for takeaway coffee.

To capitalise, the group is aiming to grow Premier Inn UK rooms by 45 percent to 75,000 by 2018, and double Costa's total sales to 2 billion pounds through expansion at home and abroad, with a particular focus on China.

The group said Costa sales had been solid in the Middle East and were up strongly in Asia, including a slight improvement in China, where the firm has opened 54 stores so far this year. Central and Southern Europe remained tough.

Total (NYSE: TOT - news) group sales grew 13.8 percent in the period, as the group took its Costa network to 2,773 stores worldwide and opened more hotel rooms, particularly in London.

Like-for-like sales at its largest unit, Premier Inn, rose 5.4 percent and 13.7 percent in total, with total revenue per available room (RevPAR), a key industry measure, up 6.5 percent.

Third quarter sales at UK Costa Coffee stores open over a year rose 4.9 percent, with total sales up 20.4 percent, while sales at the group's restaurant business also rose, thanks to menu improvements and stronger trading in London.

Whitbread is on average expected to post a full-year pretax profit of 390.23 million pounds, according to a Reuters poll of 20 analysts.

Shares in the firm, which are up 45 percent on a year ago and reached an all-time high of 3,600 pence last month, were down 0.3 percent to 3514 pence at 0830 GMT, valuing the group at around 6.3 billion pounds.