​Whitbread sees big profit rise as Premier Inn serves more customers

​Whitbread sees big profit rise as Premier Inn serves more customers

Posted by Emily on 21st Oct 2023

Whitbread, the company behind Premier Inn hotels, is seeing a big boost in profits. They've had a 30% increase in the past six months. Why? Well, their Premier Inn chain is doing well, mainly because there are fewer independent hotels now – many couldn't survive the tough times during the pandemic.

Premier Inn - geograph.org.uk - 4414613 Premier Inn by Peter McDermott, CC BY-SA 2.0, via Wikimedia Commons

Now, let's talk numbers. Whitbread's profits before taxes went up by 29%, reaching £395 million. That's just in the first half of this year! During the same time, the money they made (also known as revenue) increased by 17%, hitting £1.57 billion.

There's a way companies in the hotel business measure success called "revenue per available room." For Whitbread, this increased to £71.02 from £62.39 last year. That's good news for them!

Moreover, many people have booked Premier Inns in London – 25% more than last year. People are travelling for fun, work, or just visiting London. Also, they're making more money from selling food and drinks – 10% more, actually.

So, what's the big picture? Whitbread thinks there's room to grow. Many smaller hotels have closed or are used for something else now, and not many new ones are being built. They believe they can add even more Premier Inn rooms, aiming for 125,000 from their current 110,000.

Dominic Paul, the boss of the company, is pretty optimistic. He sees a real chance for Premier Inn to be the big player in the market, especially with fewer other hotels around.

Looking beyond the UK, Whitbread is pushing hard in Germany. They're aiming to be the top dog there and are steadily getting there, with losses going down.

Now, for the shareholders, the good performance is paying off. They're getting money back through something called a "share buyback," and Whitbread is paying them £66 million in dividends.

Whitbread shares are also doing better, rising 27% this year. At the close on Wednesday, they were at £33.66, up by 43p.

Costa Coffee, Beaufort Sq, Chepstow Andrej Shadura, CC BY-SA 4.0, via Wikimedia Commons

Richard Hunter, a financial expert from Interactive Investor, thinks Whitbread is bouncing back strong. He highlights their smart moves in spending less, being able to charge more, and just being in a stronger position after a couple of rough years that even saw them selling Costa Coffee to Coca-Cola.

A statement from Peel Hunt, a brokerage firm, sums it up: Whitbread is in the lead, and that's not being appreciated enough. They've got the advantage, the best locations, and it's tough for other hotels to compete.