Premier Inn logo on branch exterior
Premier Inn UK delivered ‘outstanding’ performance in the first quarter, claims Whitbread / Image source: Adobe
  • Broker raises earnings forecast yet again
  • UK hotel market remains robust
  • Scope for further buybacks

Despite the ongoing impact of the cost-of-living squeeze on consumer spending, Shore Capital has upgraded its earnings estimates for budget hotels operator Whitbread (WTB) for the third time this year, sending shares in the Premier Inn owner up 1.4% to £36.90 for a near-40% year-to-date gain.

The latest upwards earnings revision for the FTSE 100 hotels-to-pubs chain reflects the continuing strength in the UK leisure economy over the summer as well as an income boost from higher interest rates given Whitbread’s plump net cash pile.


For Premier Inn UK, which delivered an ‘outstanding’ performance during the first quarter according to Whitbread, Shore Capital is now forecasting 40% like-for-like revenue per available room or ‘RevPAR’ growth for the year to February 2024 over full year 2019.

The broker’s new estimate implies 10% year-on-year RevPAR growth to £65, with travel and leisure guru Greg Johnson noting the UK leisure economy ‘appears to have remained resilient over the summer, supported by a surge in inbound travel’.

Whitbread’s revenues, earnings and dividends are already well above their pre-pandemic levels, and hotel stays are on the increase again – not just for pleasure but for business customers too.

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And in the group’s first quarter update (22 June), Whitbread CEO Dominic Paul pointed out that the ‘structural reduction in hotel supply, coupled with strong consumer demand, is highlighting the strengths of our differentiated business model, as evidenced by our continued strong performance’.

Elsewhere, Shore Capital is sticking with its full year 2024 assumptions for Whitbread’s pubs and restaurants business, which includes well-known brands like Beefeater and Brewers Fayre, forecasting revenue growth of around 6% supported by self-help initiatives.

However, the broker continues to expect £35 million of losses in the current financial year from Germany, where the economy and ‘certain domestic leisure destinations appear soft’.


Given higher forecast RevPAR growth and interest income, Shore Capital has increased its full year 2024 pre-tax profit estimate by roughly £50 million to £535 million for earnings per share of 209p, which includes a 15p per share drag from the loss-making Germany business.

‘This is our third increase in calendar year 2023, with our estimates for full year 2024 up 65% since the turn of the year,’ explained the broker.

Reiterating its ‘buy’ stance on Whitbread’s shares, Shore Capital forecasts annual underlying cash generation of £800 million this year, which would comfortably cover capital investment and dividends.

It sees scope for further buybacks from the robustly-financed business, which has completed its previously announced £300 million buyback and is capable of returning £1 billion to shareholders ‘over the medium term’.


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Issue Date: 15 Sep 2023