WhitbreadThe owner of Premier Inn, which is trying to recover from revenue problems, has intensified its strategy of converting underperforming restaurant spaces into profitable hotel rooms.
The UK-based hospitality firm announced Thursday that it will add 3,500 hotel rooms through the repurposing of struggling food and beverage outlets. It expects the move will produce over £100 million ($130 million) in incremental profit by 2030.
According to Dominic Paul, CEO of the company, 70% of planned projects for converting loss-making restaurants into higher-yielding hotels are in the planning stage, with half already approved.
By the end of 2026, 500 to 700 new extension rooms should be open.
A restaurant at the Harrogate South is being replaced by an extension of 22 rooms.
Paul said, “We are on track to sell the remaining affected restaurants in the next 12 months.”
Closures affect the bottom line and reduce food and beverage revenues, but the company anticipates a quick recovery.
Hemant Patel CFO acknowledged that construction caused “a small dip in guest score” but said that the company is managing disruptions so as to minimize the impact on guests.
The pivot comes as Whitbread reported a revenue decline of 1% year-over-year, to £2.92 billion (about $3.87 billion) for last fiscal year (through February 27). Profit before tax adjusted down 14%. Revenue per available room, or RevPAR, fell by 2% due to a slight drop in occupancy from 81% to 81%.
UK & Ireland Room Growth
The conversion of rooms is part a broader strategy for growth. Whitbread opened 1,075 rooms in its fiscal year. The company expects to open 1,000-1,200 new rooms in the current financial year.
Paul explained that Whitbread is expanding in a cost effective way, by underbidding its competitors on a typical hotel development project.
“But due to the strength of our contract, the balance sheets, the property value, we often get chosen over our competitors,” said the CEO.
Whitbread continues to expand hub by Premier Inn – its smaller format brand designed for city centres. The company has 18 hub hotels spread across London and Edinburgh.
Germany: Progress but not yet Profit
In Germany, where Whitbread has operated since 2016, accommodation sales rose 24% in local currency, though adjusted losses remained at £11 million. The company is expecting its German operations to become profitable within the next fiscal.
Patel admits that there are no mature hotels in Germany: “We do not know the exact maturity profile because we haven’t matured any sites.”
Cost Savings and Look at the website
Whitbread plans to recycle £250–300 million ($330-400 million) of property this year through disposals and sale-and-leaseback arrangements. The company has also completed a formal valuation of its property.
This fiscal year, Whitbread expects to find about £50 million to £60 million in cost savings via efficiencies.
Bernstein Research analysts believe that Premier Inn’s recent RevPAR drop shows the limits of trying higher rates in an environment of low demand.
Yet Whitbread says it doesn’t need strong RevPAR growth to hit its targets — just enough to offset inflation alongside continued efficiencies.
Paul stated that “all we need is a like-for-like RevPAR increase and efficiency combined to offset inflation in order to achieve a 60 percent boost in profitability. And we will strive to do better.”
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