Premier Inn UK reopening plans  closely watched by Irish hoteliers  

Whitbread-owned Premier Inn's reopening and the way it gets back to a financially sound footing as the economies in Britain and Germany open up will be closely watched by Irish hoteliers.

The owner of Premier Inn, Britain's largest budget hotel chain, is looking to repeat last year's boost from stay-at-home holidaymakers for its seaside locations as it waits for vaccinations to be fully rolled out and restrictions on business travel to be lifted. 

Its owner Whitbread operates a large number of budget hotels in Britain, a small number in the Republic and the North, and wants to resume its big plans to expand into Germany in place before the Covid-19 pandemic struck. 

As such, its reopening and the way it gets back to a financially sound footing as the economies in Britain and Germany open up will be closely watched by Irish hoteliers.   

In full-year results, Whitbread unveiled a loss of £1bn (€1.1bn) for the 12 months to the end of March but is betting on its seaside properties, while it awaits a full recovery as restrictions are lifted.  

However, Whitbread shares fell 3.5% to trim its gains to only 6% since the start of the year, to value the hotel owner at £6.6bn (€7.6bn).

Investors are looking at the speed of recovery, its financial covenants, and whether Europe's hotel industry could face further setbacks should new Covid variants emerge later this year.

Predicting summer recovery

For the time being, Whitbread is predicting some sort of summer recovery.                

"We expect a significant bounce in leisure demand in our tourist locations during the summer, followed by a gradual recovery in business and event-driven leisure demand," Whitbread chief executive Alison Brittain said.

She said Premier Inn expects to add about 4,000 to 5,000 new rooms in the UK and Germany over the next year as it seeks to make up for lost time and replicate its budget business model in Germany.    

Whitbread said it has modelled "for a severe but plausible case" in which it would fail to meet the covenant associated with its defined benefit pension scheme and "would have sufficient liquidity to meet this additional funding need and continue to be in compliance with other covenants. 

"Whitbread needs its hotels to reach 55% occupancy to break even and although management is expecting staycations to ramp up demand in the UK, it may not be enough to push the group over the line," Hargreaves Lansdown's Laura Hoy said.