WTB, JDW: Stocks to eye as hospitality firms hike pay to attract staff

After two years of struggle due to the pandemic, Britain's leisure industry is coming back on track. Pent-up demand has brought a stronger recovery to the sector as people rush to embark on vacations that had been delayed due to the COVID-19 restrictions. Similarly, spending on other leisure activities has also increased as normalcy returns.

Among the primary beneficiaries of the boost are the hospitality companies. However, the rising demand has also brought a challenge alongside - the shortage of staff. Employers in the sector had to cut down on staff due to the pandemic, but they are now struggling to hire at the same pace.

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The shortage of labour supply in the market has prompted companies to take steps like increasing pay to attract more workers. Let us take a look at two such companies which have announced a hike in the salaries due to the difficulties in hiring.

Whitbread plc (LON: WTB)

Whitbread is a multinational hospitality firm that owns and operates hotels and restaurants. It owns Premier Inn, a popular hotel chain with over 820 hotels across the UK. The company released its trading update for the first quarter of FY23 (4 March 2022 to 2 June 2022) on Wednesday and estimated a £20 million - £30 million rise in annual costs due to the higher pay, refurbishments, and investments in IT.

The company also posted a 235.6% increase in its total accommodation sales in the UK over FY22. On a like-for-like basis, the sales were 221.6% higher. Besides, the company's food and beverages sales in the UK were 585.3% more than FY22.

Shares of the company rallied after the announcement of results and were up 4.95% at GBX 2,693.00 as of 10:56 am GMT+1 on Wednesday. Whitbread holds a market cap of £5,183.91 million at present and has provided a return of -17.20% to the shareholders over the past one year. The year-to-date or YTD return is currently at around -10%.

J D Wetherspoon plc (LON: JDW)

Wetherspoons runs pubs in the UK and Ireland. It operates over 900 pubs, and it is listed on the FTSE 250 index. From 1 April 2022, the company has raised its workers' pay to more than £10 an hour, which is more than the current National Living Wage. As per a report citing a Wetherspoons spokesperson, the pay is reviewed once or twice a year as the company tries to remain competitive within the hospitality industry.

At present, the company holds a market cap of £926.36 million, and its shares were up 1.25% at GBX 728.50 as of 11:16 am on 15 June 2022. The share value has slumped by 41.19% over the past one year and by 24.30% on a year-to-date basis.

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