Whitbread hit as demand for hotels drops

WHITBREAd said fewer customers booked into its hotels ahead of the General Election and it warned that business might not pick up again anytime soon.

The FTSE 100-listed company blamed political uncertainty for a 1.3pc drop in sales at its hotels in the third quarter compared with the same period of last year.

It said it had been hit by business customers and ordinary Britons reining in spending, which has been observed in other parts of the economy.

And it warned it is taking a ‘cautious approach’ to trading over the next year – saying it ‘remains difficult to predict business confidence in the short-term and its impact on the market’.

Whitbread is vulnerable to swings in the travel market after selling its Costa Coffee arm to Coca-Cola last January for £3.9bn.

Its shares fell by almost 5.2pc, or 250p, to 4587p last night. Hotel room sales outside of London fell by 2pc, but grew by 4.8pc in the capital in the 13 weeks to November 28. Tourists have been flocking to London since the fall in the value of the pound in 2016, which makes it much cheaper for foreign visitors. At the moment, only 20pc of Whitbread’s UK hotels are in London, but it is planning to increase this to 50pc. Total sales at the group, which also owns the Beefeater and Brewers Fayre pubs business, rose 1pc as it made more money in its food and drink division. It has plans to open another 48 hotels in Germany, to add to three opened in Frankfurt, Munich and Hamburg in the last year. Whitbread chief executive Alison Brittain ( pictured), who oversaw the sale of Costa to Coke, hailed a ‘robust performance despite challenging market conditions in the UK.

Joe Healey, investment research analyst at The Share Centre, said: ‘ despite a stronger post- election environment, Whitbread has delivered relatively lacklustre results again.

‘External factors continue to work against Whitbread, with Brexit casting a dark cloud. A higher national living wage and higher utility costs also weigh on the group’s outlook. All in all, Whitbread’s navigation of current short- term uncertainty is crucial.’

Russ Mould, investment director at AJ Bell, said: ‘Fortunately for the business, demand for its Premier Inn hotels in London is helping to offset some of the regional slack. Weak demand from business travel has been one of the big problems for Whitbread in terms of its regional hotels. To fix this situation it really needs the UK economy to pick up.’