An article by Mark Wembridge at the Financial Times this morning speaks of a slowdown in UK hotel demand. According to a report from Whitbread, targeted hotel chain Premier Inn showed a drop in sales, but the company’s Costa Coffee brand may have saved the day share sales-wise. Is the room market soft, or is the industry taking a breather?
Courtesy Whitbread PLC - Click to see the FT ticker
Whitbread PLC, the UK’s largest hotel and restaurant group, released their report along with comment from CEO Andy Harrison, which we quite in part below:
“Whitbread has delivered good total sales growth of 11.0% for the year in difficult economic conditions, as we continue to invest in our strong brands. We expect to report in April another full year of double digit earnings growth, in line with expectations.”
Harrison goes on to tell of Whitbread brands and individual performance. Of special note, Costa delivered total sales up by some 25%, with significant store openings. The strength of the Costa Coffee brand worldwide seems to have dampened to softness effects of the hotel segment for Whitbread. With the 2012 Olympics right around the corner, it seems reasonable to expect the market to stiffen soon. Time will tell, and the near term, the previous the 11 weeks to 16th February 2012, show a trend that has to concern Whitbread.
Meanwhile, most reports on the European hotel sector appear favorable. Property Magazine International reported total European hotel transaction volume rose to €7.1 billion in 2011, and increased investment activity. Realty & Investments also projects a positive trend for UK hotels for 2012, and online seller Priceline’s sales were also higher than expected, where actual room bookings go. Rumors that Travelodge may be headed for bankruptsy, even though denied by Dubai International Capital, at best paint a shaky portrait combined with the Whitbread news. “Soft” would seem to be accurate in this case.
More as the story evolves.
The numbers from Whitbread - courtesy the company website
