The Premier Inn chain was expected to benefit in Whitbread’s home market from record levels of foreigners visiting Britain due to the weakness of sterling following last year’s Brexit vote, as well as “staycationers”
However, growth in UK revenue per available room, or RevPAR, a key measure in the hotel sector, shrank to 1.8% for the six months to the end of August from 3.1% in the first quarter.
Analysts at Liberum wrote that the RevPAR increase could be disappointing as investors had expected more trickle-down benefits from inbound tourists and stay-at-home domestic consumers.
Whitbread also reiterated its caution on the economy overall, having in April sent its shares sharply lower by warning of the impact of a tougher consumer environment marked by rising inflation and muted wage growth. The shares were down 5% at one stage.
Whitbread’s underlying pretax profit rose 6.7% to £328m (€368m) in the six months, on revenue up 7.4% to £1.67bn.
The half-year dividend was raised 5%.
Growth was aided by the opening of more than 2,000 new Premier Inn rooms and 108 net new Costa stores in UK and the company said it was on track to have 85,000 rooms by 2020, up from 70,120 at the end of the half year. Costa’s UK revenue rose 8.3% to £542m, driven by a good response to its breakfast and lunch ranges and the addition of a net 108 new outlets.
The Ftse 100 company is fighting on several fronts as it seeks to expand internationally amid a dip in consumer confidence in its largest market, Britain.
Higher inflation and depressed wage growth are forcing many consumers to rein in their spending and Whitbread’s hotel business faces rising competition from online services such as Airbnb.
At its Costa coffee stores, Whitbread is introducing new blends and adding more food options as it tries to fend off competition in a crowded sector in the UK.