Weak business and consumer confidence led to a drop in sales for Premier Inn in the quarter to the end of November.
Parent company Whitbread today revealed a 0.4% decline in total accommodation sales for the leading budget chain in the UK and Ireland.
While trading in London continued to perform strongly in the period, sales in the UK regions dropped by 2% year-on-year.
The start of the group’s fourth quarter “has seen more positive regional data” helped by the timing of Christmas, along with the continuation of a strong London market.
“However, it is still early in the fourth quarter and a level of caution remains on the UK hotel environment,” Whitbread said.
Whitbread chief executive Alison Brittain said: “Our performance in the quarter reflects a good F&B [food and beverage] performance and marginally declining total accommodation sales.
“Weak business and leisure confidence in the regions continued, which was partially offset by the strength of the central London market, where we outperformed.”
She added: “Despite the short-term economic uncertainty, there remains significant long-term opportunities for Premier Inn in both the UK and Germany.
“We can access these due to our strong financial position, resilient model and ongoing investment to improve our market-leading proposition.”
Looking forward, the company said: “The UK political and economic environment remains uncertain and the sustained industry inflation continues. It remains difficult to predict business confidence in the short-term and its impact on the market.
“However, Whitbread’s strong balance sheet, efficiency programme, resilient business model and ongoing investment puts it in a strong relative position to benefit as the environment improves.
“Premier Inn’s long-term strategy to win market share and customer loyalty in the structurally attractive UK market continues as planned.
“Almost 6,000 rooms have been added to the network over the last two years, representing a 10% capacity increase, whilst maintaining high occupancy levels of around 80%.
“With an increasing proportion of customers booking directly, over 12,000 rooms in the committed pipeline, and an increasing focus on optimising the existing estate, Premier Inn is confident of continuing to win market share with incremental investment at a good return on capital.”
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