Shares in Premier Inn owner Whitbread (WTB) gained 3% to £31.52 as it revealed it has grown its market share in the hotel sector and continued to outperform the UK market.
In a third quarter trading update for the 13 weeks to 26 November, Whitbread said Premier Inn UK’s total accommodation sales performance was 8.9% ahead of the wider market, with total market share growth of 4.1% in the period to 11.4% of the UK hotel market.
A number of Premier Inn hotels have been open for key workers and those on the permitted business travel list.
LOCKDOWN STILL CHALLENGING
Despite the market share growth, lockdown has still been challenging for Whitbread with accommodation sales falling 55.2%, with occupancy at 49.3%, in the period to 26 November. Group sales were down 55.6% in the third quarter and by 70.2% in the year-to-date.
UK sales were down 66.4% for the five weeks to 31 December 2020, with occupancy at 31.1%. The company said that since the updated restrictions announced on 4 January 2021, around two-thirds of its hotels remain open while all its restaurants are closed.
In a group call with reporters, Whitbread chief executive Alison Brittain said the company expects restrictions both in the UK and Germany to last until at least the end of February, but added the firm is ‘well-placed relative to the wider market’ and that it continues to invest, particularly in Germany, in building out its estate.
She pointed to the £814.9 million the company has in cash on deposit and £1.2 billion in undrawn liquidity, and said that ‘this ensures we will be a winner once the market recovers.’
ANALYST VIEW
Shore Capital analyst Greg Johnson said the ‘key metric at this juncture remains cash burn’ and that performance in Q3 appears ‘robust’.
Whitbread’s net cash has fallen from £196 million at the end of the half year (August) to £40 million at end December. Johnson pointed out this includes £98 million spent on capex in the four months ‘suggesting underlying cash flow was broadly stable with occupancy levels close to the breakeven point in September and October.’
He added, ‘Guidance on cash burn and operating metrics remain unchanged so we would anticipate the group ending the financial year with a modest net debt position.’
