Budget hotels owner Whitbread is hoping turmoil in financial markets will raise demand for rooms as business travellers and holidaymakers tighten their belts.
The owner of Premier Inn, the UK's largest hotel chain, yesterday flagged up research suggesting the budget sector has the potential for rapid growth over the next five years. Whitbread chief executive Alan Parker said Britain's 90,000 budget rooms, of which his company has 35,000, could double to bring the country in line with the markets of France and the US.
Premier Inn gets about 55% of its business from leisure travellers and 45% from people on business trips.
"If there is any tightening of belts either in the consumer or in the business travel world then people will trade down to us," Mr Parker said.
Whitbread is rapidly expanding the Premier Inn chain and is opening 40 new hotels this year with around 3,500 rooms. Mr Parker said budget chains with their same-style rooms in every city were taking business away from a variety of competitors.
He was speaking after Whitbread reported a 13.3% rise in pre-tax profits to £99.4m in the six months from March 2 to August 30. Shares in Whitbread, which also runs Costa coffee shops and pub restaurants under the Beefeater and Brewers Fayre brands, slipped on fears it could be hit by deteriorating consumer confidence. Mr Parker said sales growth was slowing in the pubs sector but Costa had yet to see consumers going without daily coffee.
Whitbread disappointed investors earlier this year when it postponed a near-£600m bond issue, blaming market troubles. Mr Parker said the company was still planning to issue the debt and return more money to shareholders but credit markets were "effectively closed" at the moment.
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