Whitbread sales growth slows in tough economy

Britain's biggest hotel operator WhitbreaD said its sales growth had slowed in the third quarter as tough economic conditions kept customers away from its Premier Inn hotels and Costa Coffee shops, which had previously proved resilient.

The group, which also owns the Beefeater and Brewers Fayre pub restaurant chains, said on Tuesday sales at outlets open more than a year rose 2.4 per cent in the third quarter to December 1. In the first half, comparable sales had risen by 3.3 per cent.

Sales at Premier Inn hotels open more than a year were up 2.6 per cent in the quarter, compared with growth of 5.2 per cent in the first half. Sales at Costa Coffee shops on the same basis were up 3.8 percent compared with growth of 6.7 per cent in the first half.

However, total sales grew by 11.4 per cent.

"I would say this is a reflection of the general economic climate but I would say that's pretty impressive growth in total sales," Chief Executive Andy Harrison told reporters on a conference call.

Harrison said the company was on track to achieve its targets to expand Premier Inn to over 65,000 rooms in Britain from 44,000 currently by February 2016 and to grow Costa Coffee to over 3,500 shops worldwide from around 2,000 at present.

The company said it also remained on course to meet full year expectations. Market expectations for Whitbread's full-year pretax profit currently range between £301m and £329M, with the average standing at £314m, according to a poll of analysts.

Premier Inn has performed strongly through the economic downturn, benefiting from business customers trading down from four and five star hotels, and a £29 pounds per room offer wooing leisure customers in off-peak periods.

Costa has also fared well, tempting consumers seeking an affordable luxury during the downturn, and also benefiting from aggressive international expansion.