The Premier Inn owner, Whitbread, is ramping up its cost-cutting programme amid slowing demand, as the hospitality sector braces for a widely expected employer tax rise in this month’s budget.
The company, which owns the Beefeater and Brewers Fayre restaurant chains as well as the UK’s biggest hotel brand, said its total revenues had been flat at £1.57bn in the six months to 29 August, while profit before tax fell by 22% to £309m.
Sales at hotels in the UK fell by 1% year on year in the six weeks to 10 October, as business and leisure travel weakened, against a strong summer last year when travel surged after the Covid-19 pandemic.
The company, which runs 855 budget hotels in the UK and 59 in Germany, said it was expanding its cost-cutting “growth plan” to save £50m a year on average until 2030, from a previously announced £40m to £50m. The cuts, which include job cuts and restaurant closures, total £60m this year, £10m more than expected.
Whitbread shares rose by more than 5% on Wednesday morning as investors welcomed the plans.
The savings come as the hospitality sector prepares to absorb a possible rise in employer national insurance contributions, which Keir Starmer and the chancellor, Rachel Reeves, have refused to rule out.
The industry trade body has attacked the idea of employers having to pay NICs on the money they pay into staff pension schemes, warning that the measure could hit hiring and limit pay rises.
UKHospitality, which represents bars, pubs, restaurants and hotels, said staff costs were the biggest business expense in the sector.
Whitbread announced in May it would sell 126 unprofitable Beefeater and Brewers Fayre restaurants and cut 1,500 jobs out of its 37,000-strong workforce. After redeploying some people to its hotels, the actual job cuts were fewer than 1,000.
It has shut 112 restaurants and agreed 51 site sales for £56m so far, and is starting to construct more restaurants inside its hotels, which perform better. Food and beverage sales fell by 7% in the first half.
As well as closing outlets and shedding jobs, it is also making savings through a number of cost-cutting measures, such as more efficient labour scheduling and booking systems, improved website, app and restaurant menus, and using new technology such as robot vacuum cleaners in hotel rooms.
Premier Inn has 86,000 rooms and the company is aiming for 125,000 across the UK and Ireland, with 6,000 in the pipeline. It also wants to become the No 1 hotel brand in Germany, where the market is 40% larger than in the UK and highly fragmented, without a clear market leader.
