Whitbread raising £1bn from shareholders to bolster finances

The owner of the Premier Inn hotel chain is raising £1bn from shareholders to shore up its finances as the budget hotel operator warned its UK sites could be closed or barely occupied until September.

Whitbread said it might not make a profit in the year ahead as it was burning through £80m of cash a month while its income had been all but wiped out in the coronavirus crisis.

Hotel room, and food and drink revenues at the firm dived 99% in the seven weeks to 14 May after Premier Inn closed the majority of its sites in late March. Just 39 of the group’s 821 UK hotels have remained open, to cater for NHS and other key workers during the lockdown. Another 16 hotels in Germany reopened on 11 May.

The group hopes to open another 60 UK hotels in June – after the government loosened rules on the workers allowed to use hotels to include a long list of sectors such as utilities, IT and food production. The entire Premier Inn estate could reopen in early July, but the company said it was assuming its hotels would not be fully open until September as the UK government may not free up tourist travel until then.

Once open, hotels will operate with physical distancing measures including a ban on breakfast buffets, restrictions on sharing lifts and temperature checks for staff.

Even in the autumn, business is expected to pick up only gradually once physical distancing restrictions are relaxed.

Alison Brittain, the chief executive, said Whitbread was well positioned to take advantage of a likely switch to “staycations” because its simple hotels did not have spas, gyms or other services where it was difficult to maintain physical distancing.

She said Whitbread did not need the £1bn to stay afloat, with the money intended as a fighting fund to make acquisitions and expand as weaker chains and independents are hit by the coronavirus crisis. The hotel group is also hoping to snap up retail and pub sites that may become available.

Brittain said: “We want to invest in the business without being cautious about it and we think there are going to be very significant opportunities to do that. A lot of people will struggle with either cash flow or profit.”

In the year to 27 February, Whitbread reported a 1.1% rise in revenues to £2.1bn. Underlying pretax profit fell 8.2% to £358m amid a weak UK travel market, rising costs and investment in expansion into Germany.

Source: Read Full Article