Q1 FY20 trading update

19 Jun 2019 Financial & business

Resilient performance in tough market conditions

UK total accommodation sales declined 1.5% in the quarter due to weak trading conditions
In-line with previous guidance, caution on the UK business environment given macro uncertainty
On plan with our efficiency programme helping to partially offset high industry inflation
German expansion firmly on target, with 7,000 rooms open and committed
Continued investment in UK & Germany given long-term structural opportunity
Tender offer to be launched 20 June to return up to £2 billion, subject to shareholder approval

	UK like-for-like Sales Growth	UK Total Sales Growth	UK & International¹ Total Sales Growth
Accommodation		(4.6)%		(1.5)%	(1.3)%
Food & beverage		(2.1)%		(0.4)%	(0.4)%
Total		(3.7)%		(1.1)%	(1.0)%²

¹Includes Germany;
²excludes £3 million non-underlying TSA income

Alison Brittain, Whitbread PLC Chief Executive, said:

“We have delivered a resilient performance in the first quarter despite more challenging market conditions and we continue to make good progress with our efficiency programme, which is helping to partially offset another year of high industry cost inflation.

Our expansion into Germany is firmly on target. Our new hotel opening in Hamburg is performing above our expectations and our hotel in Frankfurt continues to perform well. We will open another two organic sites during this financial year and complete the first tranche of the 19-hotel Foremost Hospitality acquisition, with 13 being rebranded to Premier Inn in the first half of next year.

Whilst we are cautious about short-term market conditions, we are confident in our plans given the significant growth opportunities in the UK and internationally. Given our strong balance sheet, efficiency programme and robust business model, we are in a strong position and we will continue to invest in order to maintain Premier Inn’s competitive advantages and to capitalise on our structural growth opportunities.”

Update on market conditions

The weaker business and leisure confidence has continued, as referenced at the start of the year, coinciding with ongoing political and economic uncertainty in the UK. This has impacted domestic hotel demand, particularly in the regional business market, where most Premier Inn hotels are located. As a result of weaker demand, Premier Inn’s UK total accommodation sales declined 1.5% in the first quarter and F&B performance also declined slightly. It is difficult to predict how business confidence and business investment will evolve over the year, however, we continue to monitor its impact on the market closely and will provide an update at our first-half results in October.

Update on Return of Capital

Whitbread intends to return up to £2.5 billion of the net cash proceeds from the sale of Costa to shareholders, unless more value creating opportunities arise and subject to prevailing market conditions. The first phase has now been completed, with £482 million returned to shareholders through a share buyback programme, which ended on 10 May 2019. For the second phase, Whitbread now intends to pursue a Tender Offer to repurchase up to a further £2 billion of shares, subject to shareholder approval. If less than £2 billion is returned through the Tender Offer, the Board will consider a possible third phase to return any remaining surplus cash.