Has Brexit uncertainty taken a toll on hotel bookings?

With a reported 40% fall in annual profit, Premier Inn owner Whitbread warns the drop in demand for hotel rooms has worsened in recent weeks due to Brexit uncertainty. Whitbread also believe the demand has dropped from business travellers outside of the capital. Highly important, as businesses account for half of Premier Inn’s bookings.

Whitbread Chief Executive Alison Brittain, said the hotel market had been hit by a decline in business confidence since the referendum vote, and worsened during the period of original EU departure date. Brittain said bookings were weaker than expected and “coincided with the most acute period of uncertainty we’ve probably experienced in our lifetimes.”

The scheduled leave date of 29 March was pushed back to 12 April, and later again to 31 October. The looming threat of a no-deal Brexit forced many business to create contingency plans and rein in their spending.

Alison also said: “We hear of lots of businesses [where] uncertainty is an unhelpful element … We did have a number of even large businesses not travelling at all in the March-April period. They were just asking people to cease travel.”

In the regions where most of the 800 Premier Inn hotels are located, sales fell by 1.5% in March 2019. Revenue per available room, a key measure within the industry, was also down 4.4%. Figures show both business and leisure travellers were cutting back, however, bookings in London had remained the same as international visitors head to the capital.

According to Brittain, independent hotels are struggling even more, and for Premier Inn it was likely to add to its 9% market share. Premier Inn are the UK’s biggest hotel chain, and are going ahead with expansion plans, where their current room total of 76,000 will jump to 110,000 within the next few years.

Brittain acclaimed a “momentous year” for Whitbread. They sold their Costa Coffee chain to Coca-Cola for £3.9bn earlier this year, which leaves the brewing and leisure conglomerate with budget hotels and 740 restaurants located next door.

Whitbread made a pre-tax profit of £260m last year (excluding Costa) which was down 39% from £426m in the previous year. Their UK accommodation sales also fell 0.6% on a like-for-like basis (excluding new hotel openings). Whitbread have dropped previous beliefs that their 2019-20 profits would be flat on last year, and noted that revenues per available room would be weak, especially outside of London.

As well as the main Premier Inn chain, Whitbread owns 10 upmarket ‘Hub’ hotels. There are currently seven located in London and three in Edinburgh, with plans to open more Hubs in cities such as Bath and Manchester. Premier Inn also launched a ‘no-frills’ hotel brand known as Zip. These have small pod-style rooms costing around £19 per night, compared to the rate of £49 at Premier Inn and £69 at Hub. The first zip hotel opened in Cardiff in March this year, with a new site opening in Southampton at the end of the year.