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Whitbread slumps to £1bn loss on COVID-19 disruption but says most hotels now open


Whitbread PLC (LON:WTB) slumped to an eye-watering £1bn full-year loss on the back of the Coronavirus (COVID-19) pandemic but said most of its hotels are now open.

The FTSE 100 group expects strong demand for ‘staycations’ in the UK, where 92% of its hotels are open and leisure customers will be allowed to check-in from 17 May.

READ: Whitbread hoping to draw a line under lockdown as Scotland starts to reopen

In Germany 18 of its operational 30 hotels are open, with six of the temporarily closed hotels being refurbished and rebranded to Premier Inn.

However, Germany has recently tightened COVID-19 restrictions again, though the hotel operator said it is “in a strong position to win market share” when demand returns.

Whitbread said it expects investments of £350mln this year, including room refurbishments and marketing to aid recovery.

It will also open 2,000-3,000 pipeline rooms in the UK and 2,000 in Germany and brought forward its environmental goal of reaching net-zero carbon emissions by 2040, a decade faster than originally planned.

In the year to 25 February, revenue plummeted 71% to £589mln, leading to a statutory loss before tax of £1bn from a £280mln profit the year before.

Cash at period-end was £1.2bn, after a £1bn rights issue completed last June, with net debt and lease liabilities of £3.2bn.

Performance was severely hit by significant COVID-19 restrictions in the UK and Germany, with hotels and restaurants forced to close for extended periods.

Trading was supported by business rates relief of £117.8mln and furlough scheme of £138.3mln in the UK and £1.5mln for the equivalent in Germany, called Kurzarbeit, alongside other government grants of £10.3mln.

Whitbread said it has “significantly” outperformed the midscale and economy hotel market since reopening in August, with customer scores also remaining “very strong” throughout this period despite the disruption.

It also sped up the growth of the German hotel network and it now has a total open and committed pipeline of 72 hotels as it eyes market share gains.

“If there was any silver lining to Whitbread’s gloomy year, it was the fact that the group was able to pick up market share as its smaller rivals crumbled under the weight of the pandemic—the group was able to grow its market share by an impressive 6.9 percentage points this year,” analysts at Hargreaves Lansdown commented.

“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. When restrictions eased last summer, the group saw occupancy rise to just 51% in August and 58% in September. Ultimately, Whitbread needs sporting events, weddings, and business travel to resume in earnest before it can confidently say a recovery is on the cards.”

Shares shed 3% to 3,319.88p on Tuesday morning.

–Adds analyst comment, shares–

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