Whitbread cashes in on strong hotel market in Q1 - UPDATE

17th Jun 2014 07:09

A buoyant hotel market has helped Premier Inn owner Whitbread to book a 6.9% rise in like-for-like sales in the first quarter of the year.Whitbread said Premier Inn lifted total sales by 14.2% in the 13 weeks to May 29th, with a like-for-like sales gain of 9.5%, benefiting from continued growth in London and clearer signs of economic recovery in the UK regions. Total occupancy rose 4.2% percentage points to 80.7%. The group said its restaurants, which include the Beefeater and Brewers Fayre chains, outperformed the industry as like-for-like sales rose 4.4%, although it was up against a softer performance last year due to cold weather.Costa Coffee served up a 15.9% increase in total sales and a 4.5% rise in like-for-like sales, against demanding comparatives from last year.The group is building 43 Premier Inns in the UK and expects to open around 4,500 rooms this year, together with five joint site restaurants. Costa will open about 300 net stores this year.Group total sales increased by 12.7%. Chief Executive Andy Harrison said the group was "well positioned for another good year". Investec upgrades to 'hold'Commenting on the company´s results James Hollins at Investec wrote in a note to clients saying: "Whitbread has delivered a strong Q1 update, with group like-for-like sales +6.9% and marginal outperformance across all divisions. We are taking the opportunity to revise forecasts (FY15E and FY16E EPS move c2% and c3% ahead of consensus respectively) and move our recommendation from 'sell' to 'HOLD'. "A premium rating and key risks around incremental hotel returns dilution preclude a more positive stance, although the strength of trading across its UK brands leads us to remove Whitbread from our Sell list."PW