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Edison Investment Research

Leading International Investment Research

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Equity Bottom-Up

<p>Whitbread continues to show that the strong get stronger with Premier Inn, much the largest UK hotel chain, materially outperforming the market throughout H1 to August and to date (by 14% in the seven weeks to 14 October). Notwithstanding seasonality, accentuated by the staycation boon, management expects leisure demand to remain buoyant, with tradespeople business resilient and office-based custom recovering, thereby a potential return of UK like-for-like RevPAR to pre-pandemic levels ‘at some point in 2022’. Robust, asset-backed finances (£2.1bn liquidity) give ample scope to capitalise on structural opportunities, enhanced by COVID-19 fallout, in the highest growth segment of the hotel market, both domestically and in Germany, where management is confident of replicating its UK success.
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Whitbread continues to show that the strong get stronger with Premier Inn, much the largest UK hotel chain, materially outperforming the market throughout H1 to August and to date (by 14% in the seven weeks to 14 October). Notwithstanding seasonality, accentuated by the staycation boon, management expects leisure demand to remain buoyant, with tradespeople business resilient and office-based custom recovering, thereby a potential return of UK like-for-like RevPAR to pre-pandemic levels ‘at some point in 2022’. Robust, asset-backed finances (£2.1bn liquidity) give ample scope to capitalise on structural opportunities, enhanced by COVID-19 fallout, in the highest growth segment of the hotel market, both domestically and in Germany, where management is confident of replicating its UK success.


<p>Confirmation of recovery ‘much broader than staycations’, backed by continued significant outperformance of the midscale and economy hotel market in the quarter to May, highlights a predictably positive update by Whitbread. That is not to play down expected ‘very strong’ demand throughout the summer at tourist locations (c 15% of the estate). While key office-based demand may not pick up meaningfully until the autumn, robust finances, brand strength and economies of scale should allow Whitbread to benefit materially on pandemic fallout (Q122 saw further estate improvement in the UK and an expanding pipeline in Germany). The delay in easing UK lockdown restrictions until 19 July does not change management’s outlook and guidance for the full year to February 2022.
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Confirmation of recovery ‘much broader than staycations’, backed by continued significant outperformance of the midscale and economy hotel market in the quarter to May, highlights a predictably positive update by Whitbread. That is not to play down expected ‘very strong’ demand throughout the summer at tourist locations (c 15% of the estate). While key office-based demand may not pick up meaningfully until the autumn, robust finances, brand strength and economies of scale should allow Whitbread to benefit materially on pandemic fallout (Q122 saw further estate improvement in the UK and an expanding pipeline in Germany). The delay in easing UK lockdown restrictions until 19 July does not change management’s outlook and guidance for the full year to February 2022.


United Kingdom

Whitbread PLC is a hotel and restaurant group. The Company operates businesses in budget hotels, restaurants and coffee shops.

Whitbread PLC (WTB LN)

Whitbread - Strength in depth

Whitbread continues to show that the strong get stronger with Premier Inn, much the largest UK hotel chain, materially outperforming the market...

Edison Investment Research

Whitbread - The strong get stronger

Confirmation of recovery ‘much broader than staycations’, backed by continued significant outperformance of the midscale and economy hotel market...

Edison Investment Research