A softer level of hotel demand in the United Kingdom contributed to a 1% decline in full-year group revenue to £2.9 billion ($3.9 billion) for British hotel firm Whitbread.
Whitbread — which owns the prevalent U.K. hotel brand Premier Inn — reported its full-year earnings for the 52 weeks through Feb. 27, 2025. CEO Dominic Paul said in a conference call that Whitbread is doing all the right things to tighten its business model to adapt to an uncertain short-term economy. In the U.K., increases in the cost of living have affected consumers' disposable income to spend on domestic travel.
“At some point, the market will turn, but it is hard to call when that will happen,” Paul said. “Employment levels are still high, and household cash flows remain solid. We’re really well-placed to benefit from when it does return. All we require is like-for-like [revenue per available room] and cost efficiencies, and we are returning cash.”
Despite demand declines in its home market, Whitbread will continue to grow in the U.K. and in its second-largest market, Germany. Across its Premier Inn and Hub by Premier Inn brands, Whitbread has 852 U.K. hotels with 85,894 rooms and a pipeline of 7,192 rooms, most on a freehold basis. In Germany, Whitbread opened three hotels in the last full year for a total of 62 properties and 10,965 rooms. It has a pipeline there of 7,265 rooms, a few more than it does in its U.K. pipeline.
“The market has been softer in the last year, but we are extending our market share in both the U.K. and Germany, where we will see profitability in full-year 2026,” Paul said.
A more efficient operating model will aid Whitbread in weathering economic headwinds and demand declines, Paul added.
“Despite market demand, U.K. total accommodation sales were in line with last year driven by our continued network expansion and commercial initiatives. … [and] despite the impact on inflation, our cost base was reduced by 2%, reflecting the impact of our accelerating growth plan and our cost efficiencies,” he said.
He added that while U.K return on capital was down in the year, “it remains almost 2 percentage points higher than it was pre-pandemic.”
Total accommodation sales dropped 1% versus the same period last year, and earnings before interest, taxes, depreciation and amortization fell 3%, but still exceeded £1 billion. Profits before taxes for the period fell 14% year over year to £483 million.
“Our brand strength and the positive impact of several commercial initiatives meant that we outperformed the midscale and economy market by 2 percentage points on both accommodation sales and [revenue per available room] growth, with an increased RevPAR premium of £6.79,” Paul said.
Paul said Whitbread is feeling increasingly confident in both its key hotel markets.
“In Germany, guest satisfaction levels are high, and the product is resonating very well. In Germany, our hotels hit a sweet spot between quality and value,” he added. “One in five nights in Germany is an events night, and we are doing better pulling our commercial levers to perform better on these nights. We are the biggest growing hotel company in Germany.”
Hemant Patel, Whitbread's chief financial officer, said he expects Germany to mature in the next two years. He added the firm has become increasingly dexterous in leveraging metrics around the summer events calendar in both Germany and the U.K.
Whitbread also closed 238 of its restaurants in the year. The company plans to turn some of those spaces into "extension" Premier Inn rooms — approximately 3,500 in total — to drive higher returns. Paul said Whitbread sold 38 branded restaurants for a total consideration of £38 million. He predicted the remaining 62 restaurants earmarked for sale will be sold across the next 12 months.
Patel added the firm was confident in its overall performance that it is embarking on an additional round of shareholder returns over the next 12 months of £250 million. Whitbread returned approximately £442 million to shareholders in the last full year, and Paul added the company's five-year plan is to return £2 billion in total.
Patel said Whitbread continues to leverage its “valuable group of freehold sites of investment-grade level. The firm has a powerful balance sheet and covenants.”
Another of Whitbread's priorities is recycling approximately £1 billion of properties in its portfolio, Patel said, “our more mature properties in order to fund high-returning growth, including network expansion and accelerating growth plans and maintain average annual net CapEx of £500 million.” He predicted in the next 12 months Whitbread would dispose of between £250 million and £300 million in property asset value.
As of press time, Whitbread’s stock was trading on the London Stock Exchange at £27.27 per share, a 9.2% decrease year to date. The London Stock Exchange’s FTSE 100 index was up 2.6% over the same period.