Staycation boom fails to save jobs at Whitbread
SHARES in Whitbread slammed into reverse as the staycation boom and Eat Out to Help Out scheme failed to stop a slump in bookings during the pandemic.
Its chief executive Alison Brittain plans to lay off up to 6,000 staff from its 35,000-strong workforce as it battles to survive the crisis. Many employees will have their hours cut.
Six months of Covid hammered Whitbread during its first half, which runs from April to August.
The shares fell 2.8pc, or 60p, to 2049p as hotel sales plunged 77pc compared with the same period in 2019, while food and drink sales at restaurants dived 76pc.
Things got better in August, with the Eat Out to Help Out scheme boosting takings. And hotels near seaside and tourist hotspots were up to 80pc full.
Bookings are now running at about 40pc below last year’s levels but London and other cities are still behind the curve and could keep struggling because of the sharp drop in business travel.
The announcement on jobs comes ahead of the end of the Government’s furlough, which is supporting around 27,000 Whitbread staff and ends next month.
Cuts are also looming at pub chain JD Wetherspoon, which said yesterday up to 450 people working at its pubs at airports, including Glasgow, Heathrow and Gatwick, could lose their jobs.
Its outspoken chairman Tim Martin slammed the 10pm closing time curfew for pubs as a PR stunt by the Government. Shares rose 1.4pc, or 11p, to 785p.
The FTSE 100 eked out a small gain – rising 0.4pc, or 25.17 points, to 5829.46 – following its worst day in three months on Monday. It was boosted by cigarette makers
British American Tobacco and Imperial Brands, whose shares lit up after brokers at RBC Capital Markets upgraded the rivals from ‘sector perform’ to ‘outperform’.
According to analysts, the pair should buy back shares because institutional investors are less likely to now, given the emphasis on ethical investing.
They reckon BAT, which rose 4.1pc, or 108p, to 2733p, could buy back its current market value within nine years and Imperial, which climbed 3.2pc, or 43p, to 1384p, in seven.
The FTSE 250, which is more exposed to events in the UK and has reacted more strongly to Britain’s new Covid restrictions, fell 0.3pc, or 49.12 points, to 16,821.66. Investors in insurance companies headed for the exit after regulators pledged to ban them from offering better deals to new customers, thereby charging existing customers more for home and car cover.
The Financial Conduct Authority’s move, which interim boss Chris Woolard described as ‘ the most radical shake-up of the general insurance industry in years’, could save customers up to £3.7bn over the next decade.
Direct Line fell 7.3pc, or 22.1p, to 279.3p, Admiral was down 2.7pc, or 75p, to 2700p, Aviva by 1.1pc, or 3p, to 279.3p and Go Compare comparison site owner GoCo dipped 3.6pc, or 4p, to 107p.
Sabre fell 1.2pc, or 3p, to 254p, despite Barclays saying it is not likely to be hit by the decision.
Beazley tumbled even further, closing 14.1pc lower, down 54.8p, to 335.2p, after it doubled the amount of cash it has earmarked for Covid-related claims from £133m to £266m. It said there had been a rise in claims on events cancellation cover.
Event cancellations also hit financial news publisher and conference organiser Euromoney (down 0.9pc, or 7p, to 794p).
The group, which has had to move many of its events online, believes annual profits will be above expectations.
But it is planning another round of cost-cutting.