Why invest?

Whitbread is the UK’s largest hospitality business, employing over 40,000 people and a long-time constituent of the FTSE100. We are the number one hotel operator in the UK with a leading value F&B offering and are rapidly expanding our Premier Inn brand in Germany. The following are key elements of our investment case:

Strong track record of attractive returns for shareholders

Our strong balance sheet and vertically integrated business model differentiate us from many other hotel groups. However, in conjunction with the careful execution of our business strategy, they have delivered strong growth both in the UK and now Germany, whilst also continuing to deliver a consistent and superior customer experience. The result has been an impressive track record of consistent returns for our shareholders, outside the pandemic, and additional benefits for our other key stakeholders.

Disciplined capital allocation delivers long-term sustainable returns

Market leader in the UK

With over 840 hotels and 800 restaurants you are never far from one of our establishments. We consistently outperform the rest of the Midscale and Economy hotel sector in the UK:

Premier Inn UK performance vs the M&E market

1: STR data, standard basis, Premier Inn accommodation sales, occupancy, ARR and absolute RevPAR 3 March 2023 to 31 August 2023, M&E market excludes Premier Inn
2: STR data, standard basis, Premier Inn absolute RevPAR 1 March 2019 to 29 August 2019, M&E market excludes Premier Inn

Operationally, we control all key areas of the customer journey, helping us to achieve excellent guest scores a reputation for quality and value

Source: YouGov BrandIndex Quality & Value scores as at 2 March 2023 based on a nationally representative 52-week moving average

We have significant growth potential in the UK and Ireland

UK&I Growth | Network target increased from 110,000 to 125,000 rooms

Updated Network Plan Target

UK target equivalent to 17% market share
Postcode level analysis in 1,744 catchments, mapping existing supply and opportunity
Opportunity across all regions particularly in London and South East

Pathway to 125,000 rooms

Extensions of high occupancy freehold hotels
Organic pipeline growth and single site acquisitions
Roll-out of hub concept in London
Estate optimisation

Having conducted a detailed network planning exercise across the UK and Ireland, we have increased our long-term target to 125,000 rooms (from 110,000 rooms).

We have a growing presence in Germany

£1bn Of Capital Invested In Germany To Date
With A Growing National Presence

57 operational hotels
32 pipeline hotels
Estate growth through organic pipeline and M&A

In Germany, since opening our first hotel in 2016, our network has grown rapidly and as at 31 August 2023 we have 57 operational hotels and 32 in the pipeline. Focusing on prime locations across the country, we are working hard to grow our brand presence and build our customer base.

We have a strong balance sheet with significant asset backing

We have a substantial freehold property portfolio that represents a real source of competitive advantage. We are rated BBB (Fitch Ratings 17 August 2023) and as at 31 August 2023 had net cash of £67m.

Our strategic priorities

The execution of our three strategic pillars is delivering strong financial results. This performance, together with our vertically-integrated business model, strong fundamentals and appropriate capital structure mean we now have a platform for continued long-term growth, both in our core UK market as well as in Germany.

Our Force for Good program underpins the decisions we make, ensuring we operate responsibly and sustainably in everything we do. We are rated AA by MSCI and medium-risk by Sustainalytics and have also progressed our validation process and our carbon targets have been validated by the Science Based Targets Initiative.

Read about our business model in the about us section

Grow and innovate in the core UK markets
- Ownership and operating model is a competitive advantage
- Vertically integrated operating model is a competitive advantage
- Number one brand in the UK and a winning customer proposition
- Growth through existing pipeline, single site acquisition and optimisation
Market
share
gains
FOCUS ON OUR STRENGTHS TO GROW IN GERMANY
- Replicate our UK success in Germany
- Ambition to be the market leader
- Significant headroom to grow – organic and M&A
GROWTH
Build the capability to support long-term growth
- Freehold value and ongoing efficiency programme
- Ongoing investment in our teams and technology
- Balance sheet flexibility and ability to invest
PROFITABLE
GROWTH AT
ATTRACTIVE
ROCE

Our force for good program underpins the decisions we make ensuring we operate responsibly and sustainably in everything we do

Our strengths & opportunities

A structurally advantageous market combined with our strong and agile business model makes us well-placed to capitalise on the recovery opportunity and reinforce our market leading position.

UK
Germany

Enhanced structural opportunities

Market supply contraction accelerating PI market share gains and growth opportunity

Accelerated Decline In Independent Supply
‘000 rooms

Both UK and German markets are highly fragmented with a high percentage of independent hotel players
Both markets are characterised by long-term migration from independents to budget branded hotels, driven by demand weakness and structural cost pressures and operational advantages
The pandemic increased the rate of independent exits in the UK hotel sector, we expect this to continue over the next 18 – 24 months

Budget model is structurally advantaged

Budget hotel sector is higher growth and outperforms in downturns

Total Supply Contracted In Aftermath Of Pandemic
Total Hotel Supply ‘000¹

The UK budget branded sector has grown faster than the rest of the hotel market
The German hotel market is highly fragmented with the largest operator only having c2% market share. Our aim is to become the clear no 1. budget operator in Germany.

Broad customer reach

Flexible model caters to a wide range of customer types

Premier Inn’s customer base is driven by domestic travellers seeking short stays (typically 1 – 2 nights) for both business and leisure
This broad reach not only covers a wide range of customers and markets, but also makes us more resilient as we’re not reliant on one particular area of the market
The German market is larger than the UK and also has higher levels of domestic travel for both business and leisure, making this a highly attractive market in which to replicate our successful UK business model

Strong hotel brand

Strong hotel brand in the UK

Source: YouGov BrandIndex Satisfaction, Impression, Value, Recommended & Quality Scores as at 2 March 2023 based on a nationally representative 12 week moving average
YouGov BrandIndex Quality & Value Scores as at 2 March 2023 based on a nationally representative 52 week moving average

We have standout customer brand scores in the UK hotel market and expect customers to rely more on their most trusted brands as they seek to travel again
As our presence grows in Germany, we are working hard to replicate the success we have in the UK and grow the Premier Inn brand. We believe this can be achieved through delivering our outstanding customer proposition

Best-in-class operations

Competitive advantage driving a winning customer proposition

Brand strength
- UK’s strongest hotel brand
- Market leading customer metrics
- First choice for more travellers
Scale advantage
- Largest UK network
- Economies of scale
- Superior network access
Direct digital distribution
- Market leading direct digital distribution model
- Low-cost customer acquisition & retention
Operational control
- All hotels operated by us
- High quality experience
- Consistent execution, no brand fees
- Tailored F&B offering
Property flexibility
- Low-cost access to capital
- Access to preferred sites at local level
- Lower rent costs
Everyday efficiency
- Efficient operating structures
- Standardised model & rooms
- Ongoing opportunity to drive efficiency further

Direct digital distribution

Cost efficient and provides ownership of the customer relationship

We have market leading direct digital distribution in the UK with less than 1% of sales going through OTAs
Direct distribution has significantly lower customer acquisition and retention costs as we are not subject to high charges from online travel agents
This approach enables us to own the relationship with the customer and invest in more effective direct and digital marketing

Lean and agile cost model

Right-sized cost base enables superior value for money offering

We have a strong track record of material cost savings helped by our unique operating model where we retain control over all of our operations
Our efficiency programme ensures we retain a lean and agile cost base, enabling us to deliver both quality and value for money for our guests and return on capital for our shareholders

Financial flexibility

Strong balance sheet provides offensive and defensive flexibility

We have a strong balance sheet with low leverage and access to significant levels of liquidity, allowing us to continue to invest when others may be constrained