Whitbread reports 7pc rise in sales
Customers looking for budget deals amid the economic slowdown helped drive a 7% lift in like-for-like sales at Premier Inn and Beefeater parent Whitbread.
The firm said its Premier Inn chain outperformed the market with a 10.2% hike in like-for-like sales in the 24 weeks to August 14 as corporate customers turned to budget hotels to save cash.
Sales at the hotel business slowed since a first quarter rise of 10.7%, but Whitbread said its efforts to introduce lower price food at its restaurant arm saw comparable sales rise by 4.4%, up from 3.6% in the first three months.
Whitbread, which recently announced a swap deal with Birmingham pubs firm Mitchells & Butlers to offload restaurants in return for hotels, said business travellers now accounted for 60% of revenues at Premier Inn.
The trend towards business custom helped send average revenues per room up 5.8%, as corporate customers stay longer and spend more, according to Whitbread.
But the firm's Costa coffee operation saw a slowdown in like-for-like sales growth, at 3.7% against 6% in the first quarter.
Whitbread moved to reassure that the fall in growth came against tough comparatives last summer, when the June and July floods saw coffee sales soar.
However, there are fears that the Costa business may be the first of the divisions to feel the pinch amid a downturn as consumers cut down on discretionary spend.
Whitbread said it remained "vigilant" of the economic troubles facing the UK.
"We are well aware that times are tough and are keeping our eyes open," said Whitbread. "We are watching very carefully and if we need to take action to keep our business going in the right direction well take the action required."
It launched a plan in February to save £25 million, including by targeting "operational efficiencies" such as labour costs, merging the management of its hotel and pub restaurant and businesses, as well as outsourcing its logistics systems.
It has also been looking to counteract soaring energy and food inflation - up 20% and between 7% and 8% respectively.
Whitbread has overhauled its pub restaurant menus to offer lower cost meals for customers and has also been rebranding many of its Brewers Fayre restaurants under its new Table Table format - a more adult proposition, launched in May.
The new formats have already seen sales rise across the board, with like-for-like sales at the division excluding the effect of the new Table Table brands up by a lower 2.4%.
Shares in Whitbread rose more than 5% in early trade on news of the group-wide sales hike.
* The Birmingham Post will carry online reaction to the Wetherspoons results, which are released on Friday.