Premier Inn owners back in profit but pub costs rising

The group behind the Premier Inn chain of hotels swung back into profit in the first half of the financial year but is wrestling with rising costs as its pubs and restaurants struggle to get back to their pre-pandemic levels.

Whitbread said that pre-tax profit hit £307 million in the six months to the end of September, compared to £19.3m a year before and £220m before the pandemic.

It marks a turnaround from the incredible lows which hit the hospitality sector during the pandemic, but part of the business still has some way to go.

The Premier Inn network includes eight hotels in Northern Ireland.

Over the summer, the owner of the building on Belfast’s Alfred Street, (above) which is leased to Premier Inn Hotels Ltd, put the 148-room hotel on the market for £9.93m. It remains on the market.

“The UK value pub restaurant sector remains challenging and F&B (food and beverage) sales continue to lag pre-pandemic levels,” Whitbread said on Tuesday.

“We have launched a series of initiatives to return sales to pre-pandemic levels, although this is unlikely to be achieved in the current financial year.”

Costs are also increasing. Between inflation – especially labour and utilities – and investments in IT and marketing, the business expects costs to rise by £60m in the current financial year.

In the UK, Premier Inn is faring better than Whitbread’s restaurants. Despite the problems in the economy, demand is “robust,” Whitbread said. The momentum going into the third quarter has held up, it added.

“We delivered an outstanding trading performance in the first half of the year, with revenues and profit before tax above pre-pandemic levels,” said chief executive Alison Brittain.

“Our UK hotels traded well ahead of the market.”