Business travellers boost Whitbread

Business travellers looking to save money on hotel bills helped give Whitbread a strong first quarter, driving like-for-like sales at its Premier Inn budget chain by 10.7 per cent.

Business use through Whitbread’s Business Account loyalty scheme rose 40 per cent, the group said on Tuesday, providing a quarter of its Premier Inn revenue and pushing total sales at Premier Inn up 18.3 per cent in the 13 weeks to May 29.

The shares rose 4.6 per cent or 56p to £12.78 in afternoon trading.

Alan Parker, chief executive, said Whitbread was “very well positioned” to pick up on the trend of companies looking for business travel savings.

“We are seeing that trend at the moment,” he said. “People are trading around the marketplace and discovering we are value for money.”

Revenue per available room was up 6.2 per cent, with 8.3 per cent more rooms sold, despite a hotel expansion programme. “We have got more aggressive in our marketing than ever before,” said Mr Parker.

He added that the trend in forward bookings at Premier Inn, which opened its 500th hotel in November, was strong. The customer base at Premier Inn is split 50:50 between business and leisure travellers, but for number of nights stayed, the ratio is 60:40 in favour of the corporate market .

Though expressing caution about the consumer environment, Mr Parker said this was more directed at inflationary cost pressures. Food inflation at its Brewers Fayre and Beefeater pub-restaurants is running at 8 per cent, putting pressure on gross margins, and energy costs are up 22 per cent.

But Whitbread’s Costa Coffee chain, which has increased from 289 outlets last year to 1,051, grew like for like sales by 6 per cent and the pub-restaurants division rose 3.6 per cent. Whitbread said it had responded to pressure on margins by reviewing menu prices and through an already announced £25m programme of cost savings.

New Costa franchise agreements have been signed in Hungary, the Czech Republic, Slovakia and Singapore.

Group like-for-like sales were up 7.1 per cent, with total sales up 14.6 per cent.

Mr Parker gave no hint of any imminent disposals or strategic changes, saying that the pub-restaurants business was “definitely not for sale” and that plans for conversion to a real estate investment trust were “not on our agenda”.

A Citigroup analyst last week published a note raising the prospect of Whitbread swapping its pub assets for the Innkeeper’s Lodge hotel chain owned by Mitchells & Butlers, the pub group.

Robert Tchenguiz, the property entrepreneur, has stakes in both companies. He disclosed a holding of just over 3 per cent in Whitbread last month through contracts for difference.