Whitbread Plc
FY21 H1 post close and operational review update
Trading:
- H1 total sales were significantly down year-on-year reflecting the closure of the vast majority of our hotels and restaurants for a large part of the period
- When able, hotels and restaurants reopened quickly and safely, with the majority of the estate in the UK open by the start of August, and 98% of hotels open by the end of H1
- Since reopening, UK accommodation sales performance has been ahead of the market, benefitting from the fast reopening, the strength of the Premier Inn brand and our leading customer proposition. We have seen strong demand in tourist locations, while market demand remained subdued in metropolitan areas and London
- Across our entire UK estate, occupancy levels steadily improved on a weekly basis, averaging 51% in August, while UK Restaurant performance was boosted by the positive impact of the Eat Out To Help Out scheme. August UK total sales (accommodation and food and beverage) improved to 38.5% down year-on-year
Near-term outlook & actions:
- A rapid and robust operational response at the start of the crisis helped protect our teams, guests and the continuity of the business, and ensured the safe reopening of our hotels and restaurants with strong social distancing and hygiene standards
- Our financial response included significant reductions in discretionary spend and capital expenditure, suspension of the dividend, voluntary pay cuts for the Board and management team, and use of UK and German government support packages
- The completion of a £1bn rights issue enhanced both our financial flexibility and our ability to successfully execute our strategy in the UK and Germany
- We continue to focus on taking measured and appropriate action, at the right time, to protect the business. With market demand expected to remain at lower levels in the short to medium-term, we have now taken the very difficult decision to announce our intention to enter into consultation on proposals that could result in up to 6,000 redundancies for our hotel and restaurant colleagues (representing 18% of our total workforce). We expect a significant proportion of these redundancies to be achieved voluntarily. Our priority now is to ensure that the process is fair and that impacted colleagues are supported throughout
- This is a regrettable but necessary step to ensure that we emerge from the crisis with a lower cost base, a more flexible operating model and a stronger more resilient business
Medium-term opportunity:
- The strength of the Premier Inn brand and winning operating model is evidenced by our ability to quickly reopen our business and perform ahead of the market
- We are well-placed to continue this outperformance against the budget branded and independent competitor sets, as both become increasingly constrained
- The business retains a strong balance sheet and is well-placed to take advantage of enhanced structural opportunities in the medium to long-term