Whitbread Unveils Ambitious Expansion Plans Despite Profit Decline

Whitbread, the owner of the Premier Inn hotel chain, has announced its ambitious strategy to boost shareholder returns and expand its hotel network, despite reporting a decline in profits for the first half of the year. The company, which also owns Beefeater, Brewers Fayre, and Table Table pub-restaurants, is aiming to return more than £2 billion to shareholders over the next five years and to increase profits by at least £300 million.

As part of this five-year plan, Whitbread intends to increase the number of bedrooms it operates in the UK to 98,000 by 2030, alongside expanding its presence in Germany to 20,000 rooms. The company currently runs 86,000 rooms across 855 hotels in the UK and 10,500 rooms across 59 hotels in Germany.

Dominic Paul, the chief executive of Whitbread, highlighted the firm’s expansion goals in his statement, noting, “We are making excellent progress with our plans and over the next five years are set to deliver a step change in our performance which will fund significant returns to shareholders.” Paul took over the role last year, succeeding Alison Brittain.

Whitbread’s interim results, published alongside their expansion plans, showed flat revenues at £1.57 billion for the six months up to August 29, with pre-tax profits down by 22 percent to £309 million. The decline has been attributed to softer demand in the UK hotel market and restructuring activities affecting its food and beverages sector, which reported a 7 percent decline in sales.

The company, however, noted a strong occupancy rate of 84.2 percent over recent weeks and expects positive momentum moving forward. Premier Inn’s revenue per available room dropped by 4 percent year-on-year but remains higher than pre-pandemic levels.

Further growth is also projected in the German market, where Whitbread has seen revenues increase by 21 percent to £115 million in the first half of the year. The company is working towards breakeven on a run-rate basis in Germany, driven by a pickup in demand over the summer months. “The momentum is really building in Germany,” stated Paul, underscoring the strategic importance of the German market for Premier Inn’s international expansion aspirations.

Additionally, Whitbread has accepted offers on 51 out of 126 restaurants earmarked for sale, with plans to convert another 112 restaurants into approximately 3,500 hotel rooms. This move is aligned with their strategy to boost room count across core markets.

Whitbread was founded in 1742 by Samuel Whitbread and has evolved over the centuries from a brewery to a prominent player in the hospitality industry. Having sold its Costa Coffee chain to Coca-Cola in 2019, the company now focuses on expanding its hotel business, particularly in the UK and Germany.