Premier enjoys boost as owners cut room rates

Thursday, 16th December 2010

Budget hotel chain Premier Inn is enjoying an upturn in business after owners Whitbread cut room rates. Burgeoning business at Premier, plus higher sales of food and coffee are cited as responsible for what Whitbread expects to be strong growth in annual profits at the leisure group.

Whitbread also owns the Costa Coffee chain, Beefeater restaurants and the Brewers Fayre brand. In response to the economic turndown, Whitbread reduced the room rates at Premier Inn.

Whitbread combined the lower room rates with promotional deals at its restaurant chains. Whitbread says the aggressive strategy led to total group sales rising 14 per cent over the 39 weeks to the end of November. Like for like sales were up by 7.5 per cent.

However, sales growth in the group’s third quarter fell to 6.8 per cent. This resulted from stronger comparative figures in the period covering the 13 weeks up to 2 December.

Analysts are forecasting full year pre-tax profits at Whitbread to hit £279 million, up from the previous year’s £208 million. Whitbread CEO Andy Harrison replaced Alan Parker last month. He said he expects full-year results for the group to be in line with the strong profit growth expected in the market.

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