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Whitbread plc (LON: WTB) has reported a robust recovery in its Q1 performance, with notable improvements in accommodation sales and a positive outlook for the remainder of the fiscal year.
In the initial seven weeks of Q1, trading performance lagged behind the previous year by 1%. However, as the quarter progressed, accommodation sales rebounded to match last year's levels, marking a 55% increase compared to FY20. The demand for midweek business and peak leisure remained strong, although short-lead weekend demand, particularly in London, softened slightly, returning to more normalized levels after an exceptionally strong performance last year. Despite these fluctuations, Whitbread's brand strength and effective commercial strategies enabled the company to outperform the market. Total accommodation sales growth outpaced the market by 0.6 percentage points (Q1 FY24: 0.3 percentage points ahead), achieving a RevPAR premium of £5.62 (Q1 FY24: £6.12; Q1 FY20: £2.32).
UK food and beverage (F&B) sales were 1% below last year's figures. High occupancy rates in Whitbread's hotels drove strong breakfast sales, but this was offset by weaker performance in several of the company's branded restaurants.
In Germany, Whitbread's total accommodation sales rose by 15% compared to last year, fueled by the increasing maturity of its estate and continued room growth. The total estate RevPAR climbed to €57 (Q1 FY24: €55), with more established hotels consistently outperforming the broader market, achieving a RevPAR of €61 (Q1 FY24: €61).
Looking ahead, Whitbread remains optimistic about its full-year prospects. Recent trading in the UK has been encouraging as the company enters peak periods of the year, with a positive forward booking position. The company continues to implement its commercial program effectively, and net inflation is now anticipated to be at the lower end of previous guidance due to increased cost efficiencies.
In Germany, Whitbread has launched its first online-focused brand campaign and continues to see positive trading results. The company is on track to break even on a run-rate basis during the calendar year 2024, a significant milestone towards achieving its longer-term target of a 10-14% return on capital.
Whitbread's strong Q1 performance and strategic initiatives underscore its resilience and adaptability in a dynamic market environment. The company's ability to recover and grow its accommodation sales, both in the UK and Germany, highlights its effective management and the strength of its brand.
As Whitbread moves forward, it remains committed to enhancing its market position and delivering value to its shareholders. The positive outlook for the rest of the year, combined with strategic cost efficiencies and successful commercial programs, positions the company well for continued success.
