An “acute period of political and economic uncertainty” hit budget chain Premier Inn in the early spring.
The disclosure came today from owner Whitbread as it reported a decline in business and leisure confidence leading to weaker UK hotel demand over the winter.
Chief executive Alison Brittain said: “This weakness has increased into March and April particularly in the regional business market, coinciding with an acute period of political and economic uncertainty in the UK.
“At this stage in the new financial year it is too early to know how business confidence and its impact on the market will evolve.
“However, it’s important to note that our strong balance sheet, ongoing efficiency programme and integrated operating model means we are likely to be more resilient in a weaker market than many of our competitors.
“In addition, our ability and willingness to continue to invest through this period will place us in an advantaged position in the future.”
Despite short-term market challenges, the company aims to ensure it continues to win market share from the declining independent hotel sector in the UK and Germany, she added.
Looking forward, Whitbread added: “The UK environment remains subdued and sustained inflation continues to be a significant challenge. At this stage in the new financial year it is too early to know how business confidence and its impact on the market will evolve.”
Regional midscale and economy market total sales were down 1.5% in March and revenue per available room [revpar] fell by 4.4%, described as a “weaker performance” than expected at a third quarter trading update in January.
Whitbread is planning on for a weak UK market revpar, especially in the regions but with greater investment, including the addition of up to 4,000 rooms.
The comments came as the company revealed underlying annual pre-tax profits up 1.2% to £438 million, with UK hotel sales up 3.5%.
The Costa coffee chain sold to Coca-Cola for £3.9 billion, resulting in a statutory profit for the year of £3.7 billion.
The company said: “The UK regional market experienced a challenging fourth quarter as domestic uncertainty continued to impact business planning and leisure spend.
“Premier Inn was impacted more than the market, reflecting a higher regional presence and a higher proportion of domestic customers than the competitor set.
“The London market was stronger than the regions in the fourth quarter due to the impact of international travel, from which Premier Inn gains limited benefit.
“However, despite the short-term weakness in the UK regional market, the long-term structural opportunity remains attractive and Whitbread’s strong balance sheet ensures resilience.”
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