Whitbread cuts Premier rooms target

Premier Inn owner Whitbread put the brakes on the expansion of the hotel chain today as it announced it would open 500 less rooms than expected in the current financial year.

a7264364-618f-11e3-bb02-0a0c0223000020131210T182902
Whitbread said like-for-like sales at Premier Inn grew by 5.4% in the third quarter to November 28.

Premier Inn owner Whitbread put the brakes on the expansion of the hotel chain today as it announced it would open 500 less rooms than expected in the current financial year.

Like-for-like sales at Premier grew by 5.4% in the third quarter to November 28 while Whitbread's performance also continued to be boosted by the success of its Costa coffee chain, where sales were up 4.9%.

But shares fell as analysts said revenues per room growth continued to trail behind competitors in London and the UK regions.

Whitbread said it now planned to open 3,500 new hotel rooms in the current financial year, down from 4,000 - partly attributed to a delay in opening a central London Premier Inn. But its guidance for the following year has not been increased.

Meanwhile, its Beefeater and Brewers Fayre restaurants improved like-for-like sales by 1.8% though the group warned the sector continued to be challenging, especially outside London.

Chief executive Andy Harrison said it was "another strong quarter" for Whitbread and that it remained on track to deliver full-year results in line with expectations.

Premier Inn has opened 22 new hotels so far in the year, including two abroad.

Costa has added 246 new net stores including 133 in the UK and 54 in China, bringing the total number to 2,773. It is expected to have grown by around 300 for the full year.

Total sales at the coffee chain for the first three quarters were £882 million, up nearly a fifth on last year. However trading in central and southern Europe remained tough.

Despite the strong sales figures, shares - which have climbed about 50% in the last year - slipped on the FTSE 100 Index. Panmure Gordon analyst Simon French said they looked too expensive given the challenges faced by the group.