Premier Inn owner swings back to post-pandemic profit, but costs soar

The Premier Inn Hotel on Belfast's Alfred Street, which is currently on the market for around £10 million.
The Premier Inn Hotel on Belfast's Alfred Street, which is currently on the market for around £10 million.

THE owner of Premier Inn is facing rising costs and its pubs and restaurants are struggling to get back to their pre-pandemic levels, yet the business swung to a profit in the first half of its financial year.

Whitbread said that pre-tax profit hit £307 million in the six months to the end of September, compared to £19.3m a year before and £220m before the pandemic.

It marks a turnaround from the incredible lows which hit the hospitality sector during the pandemic, but part of the business still has some way to go.

The Premier Inn network includes eight hotels in Northern Ireland.

Over the summer, the owner of the building on Belfast’s Alfred Street, which is leased to Premier Inn Hotels Ltd, put the 148-room hotel on the market for £9.93m. It remains on the market.

"The UK value pub restaurant sector remains challenging and F&B (food and beverage) sales continue to lag pre-pandemic levels," Whitbread said on Tuesday.

"We have launched a series of initiatives to return sales to pre-pandemic levels, although this is unlikely to be achieved in the current financial year."

Costs are also increasing. Between inflation - especially labour and utilities - and investments in IT and marketing, the business expects costs to rise by £60m in the current financial year.

In the UK, Premier Inn is faring better than Whitbread's restaurants. Despite the problems in the economy, demand is "robust," Whitbread said. The momentum going into the third quarter has held up, it added.

"We delivered an outstanding trading performance in the first half of the year, with revenues and profit before tax above pre-pandemic levels," said chief executive Alison Brittain.

"Our UK hotels traded well ahead of the market."

Meanwhile in Germany, the business said that it expects pre-tax loss to hit between £40m and £50m during the financial year, better than previous guidance of between £60m and £70m.

"We are making good progress in Germany and remain focused on realising our full potential in this large and exciting market," Ms Brittain said.

She added: "Despite macroeconomic uncertainties, our current trading performance is strong and our business has proven its resilience in previous downturns.

"With a robust balance sheet and significant growth potential in both the UK and Germany, we remain confident in the full year outlook and our ability to deliver long-term value for all our stakeholders."