Whitbread share price rises after investors told to expect top end results

Joe Hall
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Sales at Costa rose 6.8 per cent. (Source: Getty)

The figures

Shares in Whitbread opened 2.35 per cent up after the hospitality giant told investors to expect full-year results to come in towards the top end of current expectations, as sales at its cheap hotels and Costa Coffee chain continued to rise.

Overall the group achieved a rise in like-for-like sales of 5.8 per cent in the fourth quarter covering the 11 weeks to 12 February, a jump largely fuelled by sales at its low cost hotel chain Premier Inn and Costa Coffe which recorded growth of 8.6 per cent and 6.9 per cent respectively.

Franchise sales at Costa rose 15.5 per cent to £516.9m. Whitbread said it plans to open 480 net new stores in the next year and a half.

Why it's interesting

With strong full-year results expected, Whitbread's forecast adds further evidence that the UK hotel sector recovery is continuing. After years of gloom following the financial crisis, hospitality companies are bouncing back and are looking to consolidate.

Falling oil prices and supermarket price wars have both benefited the UK's regional hotel market, as consumers and local businesses have found travel more affordable and living costs more affordable. Accountants at BDO revealed last month that regional hotels enjoyed a 7.9 per cent rise in average room rate to £55.81 in January while occupancy was up 4.5 per cent to 59.7 per cent.

What Whitbread said

We have continued our strong trading momentum in the final quarter, with total sales growth of 14.3% and like for like sales growth of 5.8%. Premier Inn and Costa continue to grow rapidly, winning UK market share, with Premier Inn also benefitting from the recovery in the UK regional hotel market. With this strong performance we expect to deliver full year results towards the top end of current expectations.

We are investing to improve our customer propositions even further and in our ambitious organic network expansion. This year we shall open close to 4,500 new UK rooms and c.230 [sic] net new Costa stores worldwide, with a further c.5,500 new UK rooms and c.250 net new Costa stores worldwide planned for the next financial year.

In short

Whitbread is telling investors to expect the best, as consumer spending fuels hotel market recovery.

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