Whitbread cuts 1,500 jobs

The Q3 FY21 update, which covered the 13 weeks to 26 November 2020, stated the Government’s Covid-19 restrictions continued to create very challenging hotel market conditions and as a result, total UK accommodation sales were down 55.2% with occupancy at 49.3%.

The firm stated the Government restrictions had a greater impact on the operations of its restaurants with the national lockdowns and measures in the highest tiers forcing closures.

On average, 82% of its restaurants were open during the quarter and combined with reduced capacity in each site and subdued market demand, total food and beverage sales were 53.9% behind year on year.

The firm stated its balance sheet had a net cash position at 31 December 2020 of about £40m compared to £196.4m at the end of H1.

Capital spend was at £98.4m in the four months to 31 December 2020 and the group had cash on deposit of £814.9m alongside access to a £900m undrawn revolving credit facility and up to £300m available under the Government’s Covid Corporate Financing Facility (CCFF) scheme.

Fewer than thought

The update said the firm was continuing to take action in a bid to ensure its cost based was reflective of the current demand environment including completing the restructure of its hotel and restaurant operations teams, resulting in about 1,500 colleagues leaving the business.

However, it went on to state this was less than the maximum number of redundancies previously indicated of 6,000​ and added targeted cost savings were still achieved as a result of a greater proportion of colleagues accepting a reduction in maximum contracted hours.

Whitbread CEO Alison Brittain said: “Since the start of the Covid crisis, we have responded quickly and robustly to the changing restrictions and have learnt to rapidly adapt our operations as required.

“This is testament to the efforts of our colleagues who continue to work tirelessly to maintain our very high operating standards, customer service and high levels of health and safety.

“This response has enabled us to continue to deliver the strong market share gains in the UK, demonstrating the benefits of our strong brand, direct distribution and our unique operating model.

“We expect the current travel restrictions in the UK and Germany to remain until at the very least, the end of our financial year."

Growth achievements

The CEO added: “With the vaccination programme underway, we look forward to the potential gradual relaxation of restrictions from the spring, business and leisure confidence returning and our market recovering over the rest of the year.

“We are well-placed to continue to outperform the increasingly constrained budget branded and independent competitor sets, by leveraging the benefits of our unique operating model.

Brittain went out to outline how the firm has expanded internationally with its accommodation arm.

“We expect to see increasing opportunities to develop in the UK and Germany and are pleased to have accelerated our growth in Germany with the recent acquisition of 13 hotels, taking the open and committed pipeline to 68 hotels, a major step on our path to achieving a nation-wide footprint with representation in most major towns and cities," she said.

“We continue to protect our liquidity through the careful management of our cash position and to take actions to ensure we exit the crisis as a leaner, stronger and more resilient business.

“Our strong balance sheet also provides the opportunity to take full advantage of the enhanced structural opportunities we are already seeing in the market.”