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

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

 WTB, JDW: Stocks to eye as hospitality firms hike pay to attract staff
Image source: ImYanis, Shutterstock

Highlights

  • The leisure sector is booming after the removal of COVID-19 restrictions.
  • However, companies are struggling to hire new staff and have bumped up salaries to attract more workers.

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.

Pent-up demand has brought a stronger recovery to the UK’s leisure sector

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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.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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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