​Whitbread Refocuses: Pubs Out, Premier Inns Up

Whitbread, owner of Premier Inn hotels, actively seeks to sell or repurpose approximately a third of its Beefeater and Brewers Fayre pubs. This decision emerged after evaluating the company's 400-strong food and beverage division, which has shown weaker performance than its flourishing hotel segment.

Last year, the FTSE 100 entity engaged advisors to assess the feasibility of divesting a portion of its restaurant operations. Reports from The Times indicate initial discussions with a U.S. buyout fund, which ultimately did not result in a sale due to pricing disagreements. Christie & Co. has been tasked with marketing 30 to 50 of the least profitable locations.

The context of this move is particularly notable, as many of Whitbread's pub restaurants are strategically located adjacent to Premier Inn hotels. Yet, they have to experience diminished demand. Dominic Paul, Whitbread's Chief Executive, highlighted in the 2022/23 annual report that restaurant revenues were trailing 4% behind pre-COVID figures despite an uptick in hotel occupancy. Contrastingly, Whitbread's Premier Inn hotels in the U.K. boasted a 37% revenue increase over the same period.

Plans are also in motion to potentially convert up to 100 adjacent pubs into additional hotel room inventory, signifying a deliberate shift in Whitbread's operational focus towards its hotel business. This was further evidenced by the January sale of its stake in the healthy café brand Pure, underscoring the company's refined strategy to concentrate on its core hotel offerings.

Whitbread, with over 840 Premier Inn locations across the U.K. and a portfolio that includes Thyme Bar and Grill and Bar + Block restaurants, is navigating a strategic transformation to strengthen its hotel operations.

We invite your insights and opinions on Whitbread's strategic direction. How do you perceive this pivot from food and beverage to focusing on hotel growth? Please share your thoughts in the comments below.