Hotel chains' earnings updates set to indicate UK travel and hospitality demand

16 October 2023 , 10:14

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Investors are keen to hear from the hotel giants about the strength of travel demand and future booking prospects. (Image: 2023 PA Media, All Rights Reserved)

Investors are keen to see if the cost-of-living pressures have affected consumer demand for travel as Premier Inn and Holiday Inn prepare to reveal their latest financial results. The hotel chains have previously stated that leisure travel has remained strong despite rising prices.

Whitbread, the company behind Premier Inn and food brands like Beefeater and Bar + Block, is set to announce its half-year results on Wednesday. In June, the firm reported a 15% increase in UK sales for the first quarter and predicted a robust first half in terms of bookings.

Analysts predict that the company could report revenues of around £2.9 billion and pre-tax profits of £490 million for the full year. They will be closely watching Wednesday's update for the company's revenue per available room (RevPAR), a key measure for hotels to gauge their sales performance and room occupancy.

In the last financial year, the group's RevPAR was £59.45 and occupancy was nearly 83% in the UK. Investors will be interested to see if the average room cost has increased over the first half of the year and whether this has affected demand.

Susannah Streeter, a top analyst at Hargreaves Lansdown, said: "Whitbread has expressed confidence for the year ahead and, with a strong first quarter under the belt, optimism about the half-year is relatively buoyant." She also mentioned that customers are currently accepting price increases and demand for accommodation is steady. However, she warned that cost-of-living pressures could affect spending habits, which has been impacting the share price.

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She added: "So, investors will be keeping a keen eye on future guidance, particularly for the food offering which has shown signs of weakness." Ms Streeter also noted that Whitbread's rapid expansion in Germany represents an opportunity to establish a presence in a market dominated by private hotels.

In other news, InterContinental Hotels Group (IHG), the owner of Holiday Inn, is set to update investors on its trading performance this Friday. The group, which also operates high-end hotels like Regent and Six Senses, reported sales growth of nearly a quarter in its August half-year results. It stated that it had not seen any signs of consumers reducing spending or demand for leisure travel decreasing.

Analysts predict that the group will report an increase in its annual revenue which reached 1.8 billion US dollars (£1.5 billion) in the latest year.

Investors are keen to hear from the hotel giant about the strength of travel demand and future booking prospects.

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Steve Charnock