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Premier Inn owner reports Omicron hit to bookings and says it will put up room rates as costs surge

Premier Inn owner Whitbread has reported a hit to bookings as Omicron disrupted the run-up to Christmas - and warned that it will put up room rates as it faces surging costs. 12 January, 2022

Premier Inn owner Whitbread has reported a hit to bookings as Omicron disrupted the run-up to Christmas - and warned that it will put up room rates as it faces surging costs.

Whitbread said while group sales rose by 3.1% in the third quarter to 25 November, consumer jitters and restrictions over the variant led to a "softening" in demand.

But it said that while its core British operations had proved mostly resilient ahead of the festive season, with like-for-like hotel revenues up 5% on the same period two years ago, the restrictions in Germany had taken a greater toll.

It has 32 Premier Inn sites in the country with more than 800 in the UK.

The group said it expects cost inflation later this year to run at a higher than normal 7-8% which it plans to offset "through cost efficiencies, estate growth and higher price".

The UK's hospitality industry - among the worst-hit sectors during the early stages of the pandemic - began seeing a pick-up in trade last year as vaccination campaigns accelerated and restrictions were eased.

Whitbread reiterated that it expected sales at its UK hotels to fully recover this year.

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However, it said on Wednesday: "Market-wide supply chain challenges, and potentially softer trading in January and February, mean we have delayed around £20m of our previously guided... marketing and refurbishment investment plans this year, and our capital expenditure will now be around £275m."

Shares were trading fractionally higher in early deals.

Chief executive Alison Brittain told a call with analysts that Whitbread, which also has the Brewers Fayre and Bar+Block brands in its stable, had witnessed an improvement in supply chain disruption in recent weeks.

In earlier remarks to investors, she said: "Q3 (third quarter) represented another strong performance in the UK with Premier Inn continuing to trade significantly ahead of the market.

"High levels of leisure demand and improving business demand helped maintain like-for-like accommodation sales ahead of pre COVID-19 levels.

"UK accommodation sales remained resilient in December, albeit softening as we moved through the month and into the festive period as a result of the onset of the Omicron COVID-19 variant.

"Whilst our hotel performance was excellent, the value pub and restaurant sector in which we operate remains more challenging."

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