Whitbread has announced plans to “unlock” 3,500 new hotel rooms at existing Premier Inn sites by converting “lower-returning branded restaurants”.
The move will see 112 branded restaurants converted into rooms, once the F&B offering at the relevant sites has been transferred to an integrated restaurant.
A further 126 lower-returning branded restaurants are set to be sold as going concerns, with Whitbread already having agreed terms to sell 21 of these for £28 million.
The group said that “Whilst our UK hotel performance has gone from strength-to-strength, the performance of some of our branded restaurants has been impacted by a reduction in footfall from non-hotel guests with the result that they have struggled to meet their targeted levels of return”.
Whitbread said that this, combined with “a marked reduction in hotel supply and a shortage of development funding” had created an opportunity to grow Premier Inn’s room pipeline “at a time when many competitors cannot”.
It said that the new rooms would be added in “high-demand locations where we have identified a shortfall in supply”, and would enable Premier Inn to reach 97,000 open rooms in the UK by the end of FY29.
Whitbread currently operates a number of restaurant brands in conjunction with Premier Inn properties, including Beefeater, Brewers Fayre, Table Table, Cookhouse + Pub and Bar + Block.
The last of these is present at the group’s largest non-airport hotel in London’s Paddington Basin, which I reviewed in summer 2023.
Whitbread said that the plans – which are subject to consultation – would result in a reduction of around 1,500 roles out of a total UK workforce of 37,000, and added that it would seek to find alternative opportunities wherever possible.
The news comes as Whitbread announced adjusted pre-tax profits of £561 million for the full year to 29 February, 2024, up 36 per cent on the previous year.
Commenting on the results Dominic Paul, Whitbread’s chief executive, said:
“We have delivered an outstanding set of results in FY24, led by the strength of our UK hotels business. Our increased levels of profitability, operating cashflow and return on capital reflect the power of our unique operating model.
“Our freehold-backed balance sheet, together with our strategy of continuing to invest, is allowing us to take advantage of the significant structural growth opportunity that exists following the decline in UK hotel supply.
“Against this backdrop, we are increasing our momentum to deliver long-term profitable growth. In addition to our strong commercial programme, we plan to optimise our F&B offer at a number of our sites to unlock up to 3,500 room extensions that will enhance the service for our hotel guests and deliver increased operational efficiencies.
“We recognise that our transition will impact some of our team members so we will be providing support throughout this process and we are committed to working hard to enable as many as possible of those affected to remain with us.
“The short-term impact on our profit performance this year will be more than offset by an uplift from FY27 with further increases thereafter in both margins and returns as we open more of the new extensions.
“In Germany, we are encouraged by our progress to date and the opportunities we now have to both build our brand awareness and refine our trading strategies further. We are on track to break-even on a run-rate basis during calendar year 2024 and with 10,500 rooms now open and a further 6,000 in the pipeline, we are on course to fulfil our ambition of becoming the number one hotel brand in Germany.”
Last month Whitbread announced plans to open a subterranean hub by Premier Inn property in London’s Bloomsbury, housed within “under-utilised” car parking space under The Brunswick Centre.
Underground hub by Premier Inn property to open in London’s Bloomsbury
