Premier Inn is planning to increase UK room rates this year to offset the impact of rising costs, which are predicted to increase by seven to eight per cent for the hotel sector.
The chain operates more than 800 hotels and parent firm Whitbread said bookings for Premier Inn’s UK properties remained “resilient”. Although there has been a “softening” of demand in recent weeks, due to the rapid spread of the Omicron variant of Covid-19, according to Whitbread's latest trading update released on Thursday (12 January).
Premier Inn has outperformed the overall UK hotel market with sales growth that was nearly 15 percentage points higher than the sector average in its third quarter (up to 25 November 2021), due to “strong leisure demand and recovering business demand”.
Meanwhile, Premier Inn’s 32 hotels in Germany have been hit harder by the country’s tighter Covid restrictions, which have acted as “significant market drag” and are set to last until the end of the winter season.
Inflation in the hotel sector is forecast to be above “historic average levels” this year, Whitbread expects Premier Inn to “largely offset” these increased costs through higher average room rates, alongside its efficiency programme and the opening of new properties.
Inflation in the hotel sector is being driven by higher energy and labour costs, as well as increased construction prices.
Whitbread’s CEO Alison Brittain said business travel demand in the UK had been “improving” in the three months before the emergence of the Omicron variant, with overall like-for-like sales ahead of pre-Covid levels.
“In the UK, we will grow through the competitive advantages of having by far the largest network of hotels and operating the number one hotel brand, combined with our direct distribution, best-in-class operating model, broad customer reach and underpinned by our market-leading sustainability programme,” she added.
“These unique attributes, combined with our yield management, estate growth and cost efficiency programme, ensure we are in a far stronger position than others to offset inflationary headwinds and return to our pre Covid-19 margins.”