14 October 2008

Weak economy is helping Premier Inn

Premier InnÃ¢â¬â¢s owner Whitbread claimed the budget hotel chain is benefiting from the weak economy, as it released its half-year profits today.

Whitbread, which also owns Beefeater and Costa Coffee, saw pre-tax profits jump by 24% to Ã&#pound;123.3m in the six months to August 28.

It said corporate customers were downgrading to budget brands in the economic crisis, helping Premier Inn to grow sales by 10.1%, excluding newly opened hotels, and to achieve occupancy rates of 79.3%.

The chain has seen a significant rise in the number of new businesses joining its Business Account scheme.

In the first half, Premier Inn won over 1,800 new companies, taking its Business Account customer base to almost 13,000 businesses.

Sales through the Business Account scheme increased by 36% to Ã&#pound;86 million.

The group is continuing to expand the Premier Inn portfolio, with 4,000 rooms being added this year. It now has 37,231 rooms in 532 hotels in the UK.

Ã¢â¬ÅâœWe continue to evaluate other avenues of growth to expand Premier Inn in the UK. In the first half of the year, we announced the acquisition of 21 Holiday Inn Express hotels from Mitchells & Butlers in exchange for 44 standalone Restaurants,Ã¢â¬~ said the Whitbread financial results statement.

This transaction added 1,245 rooms, plus the opportunity to add a further 200 rooms from extensions.

Ã¢â¬ÅâœJoint sites, where we own and operate a hotel and adjacent restaurant, account for nearly two thirds of Whitbread Hotels & RestaurantsÃ¢â¬â¢ unit operating profit,Ã¢â¬~ the statement continued.

Ã¢â¬ÅâœOwning the customer proposition in both the hotel and restaurant and operating the site with one team means we can generate a value creating return on capital used. In the second half of the year, we will be opening a further six new joint sites, adding to the seven opened in the first half.Ã¢â¬~

Overseas, Premier opened a property in Dubai Investment Park in April and has now secured nine other sites to build 2,200 rooms.

In India, it has secured five sites to build 688 rooms and is due to open its first hotel in September 2009.

By Bev Fearis