Budget hotel market leader Premier Inn is benefitting from a “structural shift” in the UK towards strong branded hotels, according to the boss of parent company Whitbread.
Underlying first half profits for the group’s hotels and restaurants division rose by 8.5% to £181.3 million.
Premier Inn’s sales were up by 12.9% to £443.5 million, significantly outperforming rivals, claimed the firm. Almost 1,600 rooms were opened in the six months, taking the total to 49,020.
Whitbread has a “secured pipeline” of more than 11,000 more rooms and is on track for a “milestone” of 65,000 rooms by 2016.
The group’s underlying pre-tax profit, including the Costa coffee chain, increased by 10.6% to £193.4 million. But the London Olympics provided only marginal 0.7% growth in revenue per available room at Premier Inn.
Whitbread chief executive Andy Harrison said: “The London market is settling post the Olympics and we are waiting for a clear trend to emerge.
“For the half year, Premier Inn delivered like for like revpar growth of 4.4% in London compared to a decline of 3.5% for the midscale and economy sector.”
He added: “The regional hotel market has continued its revpar decline. More generally, our consumer market context continues to be broadly flat.
“Against this background we expect to continue to outperform our competitors and like for like sales growth to be more moderate than the high levels achieved in the first half.”
The increasing strength of the Premier Inn brand is highlighted by a further increase in ‘guest recommend’ scores and rapid growth in visitors to the premierinn.com website.
“Premier Inn is benefitting from a structural shift in the UK towards strong branded hotels,” said Harrison.
“Our dynamic pricing model continues to evolve and we extended our two tier pricing system, Premier Flexible and Premier Saver, to two-thirds of our estate, which has provided a modest uplift to revpar,” said Harrison.
“We expect this model to be fully rolled out across the estate by the end of 2012/13. We maintained our investment in marketing and our website traffic increased to 29 million visits during the first half of 2012/13, up 22%.
“Our percentage of automated bookings has also risen from 76% to 82% year on year.”
The company plans to spend around £75 million on refurbishing and maintaining Premier Inn hotels this year.
“Our experience is that refurbished rooms lead to an increase in our guest net recommend score, reinforcing a consistently higher guest experience across our estate,” said Harrison.