Whitbread, the hospitality giant behind Premier Inn, could face a surge in UK costs of over £100m following the Autumn Budget. The company issued a statement on the London Stock Exchange, warning of gross UK cost inflation between five and six per cent on a £1.7bn cost base, considering the impact of Rachel Reeves’ plans.
This could result in an additional expenditure of up to £102m at the higher end of guidance. However, analysts predict that the total direct impact from the Budget would be a maximum of £70m, as reported by City AM.
Whitbread suggested it could reduce this figure by approximately £50m through “efficiencies.”
While not ruling out potential job cuts when questioned by City AM, the firm stated it was considering various niche strategies to cut costs, including the use of robot hoovers. This comes as the company reported a four per cent year-on-year drop in quarterly sales in the UK, counterbalancing gains in its German operations.
In the six weeks leading up to 9 January, Whitbread noted a two per cent increase in accommodation sales, while in Germany, sales rose by over a third. Chief executive Dominic Paul commented: “The structural shift in UK supply has meant that Premier Inn is continuing to sustain the significant gains made since the pandemic,” adding, “Whilst forward visibility remains limited, the favourable supply backdrop, together with our brand strength and commercial initiatives, means we are confident that we can continue to outperform the market.”
“In Germany, we continued to perform strongly in what is an important trading period. As a result, we remain on track to reach profitability on a run-rate basis this year which is a key milestone and gives us real confidence as we continue to build momentum towards becoming the country’s number one hotel brand,” stated the chief executive of Whitbread. The company’s shares have seen a slight increase of just over one per cent since the start of the year.
The Dunstable-headquartered owner of Premier Inn has previously set out a five-year goal to return more than £2bn to its shareholders through dividends and buy-backs, along with £300m in additional profit. It confirmed on Thursday that this target remains within reach.