Whitbread set for expansion

Wed, Feb 27, 2013, 00:00

Whitbread, Britain’s biggest hotel and coffee shop operator, said it was preparing for more competitive markets in 2013 as two of its big rivals, Travelodge and Starbucks, shake off recent setbacks.

The company said it would meet annual profit forecasts even though heavy snow in January had slowed like-for-like sales growth in its fourth quarter to 2.7 per cent, hitting its restaurant business in particular. That was down from a rise of 3.3 per cent across the group in the third quarter.

Whitbread has performed strongly through the recession as customers trade down to its more affordable Premier Inn hotel rooms and flock to its ever-expanding Costa Coffee houses. Sales rose 14.8 per cent in the 50 weeks to February 14th.

By contrast coffee rival Starbucks has struggled to overcome allegations of tax avoidance. And Travelodge, the UK’s second-largest budget hotel firm, had difficulty finding cash for refurbishment. Both are now overcoming those problems and Travelodge is expanding after restructuring.

Whitbread also runs the Beefeater and Brewers Fayre pub restaurant chains and has been caught up in the Europe-wide horse meat scandal. Yesterday it said no more contamination had been found, it had a new supplier of beef burgers and was planning new traceability.

At Costa Coffee, which recently grabbed headlines when 1,700 jobseekers applied for just eight posts at one of its new British stores, like-for-like sales rose 5.5 per cent compared with growth of 7.1 per cent in the previous quarter.

Costa has 1,500 UK stores and expects to increase that to 2,000 as part of a push to double its size worldwide to 3,500 stores by 2015/16. As well as expansion in China, the firm is testing stores in European transport hubs, including Lisbon airport and the Gare de Lyon train station in Paris.

Sales at Premier Inn rose to 2.9 per cent in the quarter, improving on a 2.5 per cent rise in its third quarter. – (Reuters)