Shares in Premier Inn owner Whitbread (WTB) fell 3.2% to £33.02 as it reported a £1 billion annual loss and lamented the ‘most challenging’ year in its 279-year history.
In the year to 25 February 2021, Whitbread reported a statutory pre-tax loss of just over £1 billion compared to a £280 million profit the year before, as revenue plunged 71.5% to £589.4 million.
On an adjusted basis, the loss before tax came in slightly better than analyst expectations at £635 million, while it also ended the year with just £46 million in net debt - down from £322.9 million the previous year - following the £1 billion equity raise earlier in its financial year.
‘MOST CHALLENGING IN 279-YEAR HISTORY’
Whitbread’s chief executive Alison Brittain called the last financial year ‘one of the most challenging in our 279- year history’, as the firm operated under significant Covid restrictions ‘which had many implications for our businesses, our customers and our people.’
But Brittain said that due to its ‘unique operating model’, as well as the ‘strength of the Premier Inn brand’ and its direct distribution model, Whitbread has continued to ‘deliver strong market share gains in the UK’, with Premier Inn taking a 14.7% share of the hotel market in the UK by February this year, up from 10.8% in August.
Brittain added, ‘Our exposure to the faster recovering budget sector, our resilient customer mix, and the enhanced structural opportunities that the COVID crisis has created, positions us well to continue this outperformance.’
Whitbread is targeting further market share gains in the UK as the country’s hotel market is highly fragmented, with independent operators still accounting for around 48% of the sector.
ANALYST VIEW
Shore Capital analyst Greg Johnson said the key message from Whitbread’s full year results was that performance has been in line with expectations, its balance sheet ‘remains strong’ and that it’s ‘set to push on the accelerator’ for its expansion plans in Germany and market share gains in the UK, with over £350 million set to be invested in its current financial year.
Going forward Whitbread expects strong demand for UK staycations this summer in its tourist locations, which make up 15% of its estate, with business and event-led demand to gradually recover thereafter.
Shore Capital’s working assumption is that Whitbread’s RevPAR (revenue per available room) is set to still be around 10% below pre-Covid levels during its 2023 financial year and fully recovered by its 2024 financial year.
But Johnson said, ‘The pace of economic recovery currently expected and potential market share gains would suggest this could prove conservative, with management targeting FY2023, although the timing remains uncertain.’
