Hotel giants to give glimpse into consumer travel demand

Investors will get a glimpse into whether consumer demand for travel is holding up against cost-of-living pressures when the owners of Premier Inn and Holiday Inn unveil their latest financial results.

The hotel chains have said leisure travel has remained buoyant despite rising prices.

Whitbread, which owns lower-cost hotel chain Premier Inn, as well as food brands including Beefeater and Bar + Block, will report its half-year results on Wednesday.

The company provided a cheery update in June when it reported a 15% jump in UK sales over the first quarter and said it is expecting a strong first half in terms of bookings.

For the full year, the firm could see revenues of around £2.9 billion and pre-tax profits of £490 million, according to a consensus compiled by analysts.

Analysts will be keeping an eye on Wednesday’s update for the company’s revenue per available room (RevPAR), an important measure for hotels to get a sense of their sales performance and how many rooms are being filled.

In the UK, the group’s RevPAR was £59.45 and occupancy was nearly 83% for its latest financial year.

Investors will be looking to see whether the average cost of rooms has gone up over the first half of the year and if it has dampened demand.

Susannah Streeter, lead equity analyst at Hargreaves Lansdown, said: “Whitbread has expressed confidence for the year ahead and, with a strong first quarter under the belt, optimism about the half-year is relatively buoyant.

“For now, customers are happy to swallow the price increases, and demand for accommodation is ticking along nicely.

“However, concerns are lingering that cost-of-living pressures could start weighing more heavily on appetites to spend and that’s been affecting the share price.

“So, investors will be keeping a keen eye on future guidance, particularly for the food offering which has shown signs of weakness.”

The business has also been rapidly expanding in Germany, and Ms Streeter said this represents an opportunity to establish a foothold in a market led by private hotels.

Meanwhile, the owner of Holiday Inn, InterContinental Hotels Group (IHG), is due to update investors on its trading performance on Friday.

The group, which also runs higher-end hotels including Regent and Six Senses, reported sales growth of nearly a quarter in its August half-year results.

It said it had not seen any signs of consumers cutting back spending or demand for leisure travel dampening.

The group is expected to report an increase in its revenue for the full year – which hit 1.8 billion US dollars (£1.5 billion) in the latest year – according to analysts’ consensus.

Investors could also be looking for reassurance from the hotel giant that travel demand has stayed strong, and the outlook for future bookings.