Oct 25 (Reuters) – Premier Inn owner Whitbread (WTB.L) said on Tuesday that surging costs for labour, utilities and food would eat into margins in the second half, sending its shares down more than 3% despite reporting better-than-expected first-half results.
The hotel chain operator swung to a group profit before tax for the six months ended Sept. 1 of 307.4 million pounds ($347.98 million), compared to a loss of 19.3 million pounds a year earlier, with revenue doubling as travel rebounded.
Premier Inn UK's strong trading performance has continued into the third quarter, the company said, with forward bookings in a positive position despite economic uncertainties as people spend more on travel now that restrictions have eased.
Budget hotel chains in particular are seeing robust demand for stays as consumers switch to affordable options amid a cost of living crisis, but they are also battling inflationary pressure.
Whitbread said inflation as well as investments in technology and marketing would increase its costs by 60 million pounds in the second half.
Despite rising inflation, food and beverage sales remained 5% below pre-pandemic levels and were unlikely to fully recover this financial year, the company added.
"Something that will be keeping the chief executive up at night will be the performance of its food and beverage arm," Mark Crouch, an analyst at social investing network eToro said in a note.
Shares of the firm fell as much as 3.2% in early trading but pared some losses and were last down 1.8% at 2,564 pence as of 0818 GMT.
($1 = 0.8834 pounds)
Our Standards: The Thomson Reuters Trust Principles.
Thousands of film and television writers headed to picket lines on Tuesday for their first work stoppage in 15 years, sending Hollywood into turmoil and disrupting TV production as the industry wrestles with the shift to streaming.
Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.
Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.
The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.
The industry leader for online information for tax, accounting and finance professionals.
Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.
Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.
Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.
All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.
© 2023 Reuters. All rights reserved