Consumer confidence is expected to rise sharply this summer, with the steady improvement in both price inflation of goods and wage growth putting more money in household budget pots. Yet these factors have already begun to play an instrumental role in the recovery of the retail and hospitality industries, as recent figures released by the Whitbread group have shown.
Thanks to rising sales at both its Costa Coffee and Premier Inn subsidiaries, Whitbread has seen a comfortable rise in profits for the year to the 27th of February 2014. A 1 per cent increase in profits to £347 million has reignited confidence among shareholders, while a group revenue rise of 13 per cent has allowed bosses to consider further expansion plans for the best performing businesses under the group’s umbrella.
Costa was the key driver of growth in the group’s financial year, as consumers eager for a caffeine fix pushed up sales by an impressive 20.1 per cent. In part, this was due to the 177 new openings undertaken throughout the year – bringing the coffee chain’s high street commercial property portfolio total to 1,755.
As a result, Whitbread chairman Anthony Habgood has confirmed that expansion of the Costa chain will be a priority for the group in the coming years. Although it has not yet been revealed how many new outlets will be opening per year, he expects that the total number of Costa stores in the UK will number at least 2,200 by 2018.
At Premier Inn, meanwhile, total sales rose by 13.4 per cent during the financial year, largely aided by the fact that the average number of rooms let per night rose to an impressive 78.1 per cent of total capacity during the period. This allowed the brand to expand with confidence, increasing the number of hotels in the UK by 23 to give a total of 672.
In terms of rooms, this now means that Premier Inn operates 55,035 in the UK at present, with a further 11,500 in the pipeline due to be launched in the next year or so. This puts the brand well on track to meet its target of offering consumers 75,000 UK hotel rooms by 2018.
Mr Habgood believes the current economic environment plays well into Whitbread’s hands, and will continue to promote growth in its major brands.
He says; “I am confident that the brand strength of Premier Inn and Costa will continue to fuel the company’s growth into the future.”
The only mark on an otherwise impeccable annual record for Whitbread was the performance of its restaurant chains, Brewers Fayre and Beefeater amongst these. In this division, sales rose by only 3.9 per cent, reflecting the cautious mood in the pub and restaurant sector as consumers continue to buy cheaper alcoholic beverages from supermarkets.
Yet with the Budget’s impact upon alcohol duty set to be seen in this financial year, perhaps 2014 will bring greater fortune for this division – allowing Whitbread to boost sales, profits and group revenues still further.
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