Whitbread set for profit and sales jumps despite pressure on hospitality

Whitbread is set to reveal a rise in revenues and profits for the past year as investors will be keen for a positive outlook for hospitality spending.

The Premier Inn and Beefeater owner will unveil its latest annual results in an update on April 30.

Shareholders will be on the lookout for positive signals about future trading, with the company’s share price currently at its lowest levels for a year.

It comes amid a challenging backdrop for the hospitality sector, with many Britons opting to spend time at home in favour of going out to pubs and restaurants in the face of the higher cost of living.

Nevertheless, the group is predicted to reveal a 14% increase in revenues to £2.99 billion for the 2023/24 financial year.

A consensus of analysts have also forecast that it will show pre-tax profits of £565 million for the year, from £413.4 million a year earlier.

Whitbread has been supported by growing its hotel estate, adding around 2,000 new rooms to increase sales.

Earlier this year, the company said it has benefited from strong pricing and availability compared to its competitors in order to help drive growth.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Whitbread’s Premier Inn enjoys an enviable position in the mid-range hotel sector.

“With revenues per available room having surged by nearly 40% above pre-pandemic levels, the value tag no longer seems quite so appropriate to attach to the chain.

“However, amid cost-of-living headwinds, there are only so many price increases that tourists will stomach, so investors will be keen to see that demand is still continuing despite the price hikes.”

Ivor Jones and Douglas Jack at Peel Hunt have suggested there could be cause for optimism around the company, suggesting investors buy into the stock and indicating it could see sales improve over the summer.

“Recent weakness in industry has been misinterpreted – demand pick up in summer and, with it, pricing power,” they said.

“The post-pandemic recovery is over and, with persistent cost inflation, profit growth if harder to come by.

“However, it is harder still for independents and Whitbread comes with a cheap option for Germany.”

The company is predicted to show reduced profits from its German business for the year although this is also expected to grow on the back of recent investments.

Another area of interest for investors will be the group’s pub restaurant portfolio.

Shareholders will have an eye out for any potential updates related to the sale of properties or transformation of sites into hotels after the Times reported it drafted in advisers to sell around a third of its worst performing Beefeater and Brewers Fayre pubs.