Whitbread, which owns budget hotel chain Premier Inn, reported mixed but generally solid third-quarter results, with strong growth in Germany offsetting slight weakness in the UK.
number: Systemwide total revenue per available room fell 2.5% year-on-year, but UK bookings remained 51% above pre-pandemic levels as demand from international visitors pushed London occupancy to 83%.
Strong growth in Germany: Premier Inn's emerging business in Germany, which includes about 60 hotels, saw sales rise 23% in the quarter, accelerating to 37% in December and early January. Revenue comes from using online travel agencies to build brand awareness in the market, executives said.
why this is important: Premier Inn's results show that the budget hotel market continues to outperform mid-market hotels, suggesting economic pressures are driving travelers to value hotels.
Rising costs: Barclays analysts warned in a note that there could be headwinds in 2025-26 due to rising interest costs. However, the same higher room rates could benefit Premier Inn by limiting new hotel development and reducing competition.
efficiency push"Obviously there's been a slight increase in labor costs," Whitbread chief executive Dominic Paul said, adding that job cuts and the adoption of automation could help. Paul is confident the company can achieve hundreds of millions of dollars in cost efficiencies by 2030, in part by converting underperforming restaurants into hotel rooms.
what's next in the UK: The company continues to focus on its UK restaurant-to-hotel revamp strategy, with early results showing improved guest satisfaction in revamped spaces.
What’s next for Germany?: Premier Inn's business in Germany should also soon turn a profit. "We expect to be profitable in Germany during the second half of this financial year and the first half of next financial year, a 12-month period," Whitbread chief financial officer Hemant Patel said.
Brand strength: Paul said he liked Premier Inn's market positioning. "Customers love that they know they're going to get a really consistent experience from us, they know they're going to get a great night's sleep, the best bed in the industry, a really delicious breakfast, warm and friendly service, all underpinned by a strong value proposition ”
What am I looking at? Performance of hotel and short-term rental sector stocks within the ST200. The index includes companies publicly traded in global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative lodging and timeshares.