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Tue 25th Apr 2017 - Update: Whitbread results, Easyhotel signs Nepal franchise
Whitbread reports profit before tax up 6.2% to £565.2m: Whitbread has reported group total sales growth of 8.2% to £3,106bn in the 52 weeks to 3 March 2017 and underlying profit before tax up 6.2% to £565.2 million. Premier Inn saw total sales growth of 9.0%, and like for like sales up 2.3%. Costa total sales growth of 10.7%, system sales up 12.7% and UK equity like for-like sales up 2%. Group return on capital was 15.2% (2015/16: 15.3%). Cash generated from operations was £860.1 million, which funded cash capital investment of £609.8 million and a proposed full year dividend up 6.0% to 95.80 pence. Alison Brittain, chief executive, said: “Whitbread has had another year of strong growth and continued investment with total group sales increasing 8.2% to £3.1 billion and underlying basic earnings per share increasing by 6.0%, demonstrating the strength of our core brands. Total basic earnings per share increased by 7.3%. In 2016/17 we made good progress in delivering on our three strategic priorities: to grow and innovate in our core UK businesses; to focus on our strengths to grow internationally; and to build the capability and infrastructure to support long-term growth. Premier Inn’s strong sales growth benefitted from the 3,816 gross new UK rooms we opened this year and the accelerated maturity of the c.9,000 rooms we have opened over the last two years. We delivered high customer satisfaction by leading the market on quality and value, achieved occupancy of over 80% with record levels of direct bookings at 94%, all of which supported our strong return on capital. Costa opened 255 net new stores worldwide and we continue to roll out our successful and fast growing Costa travel formats. Costa Express had a great year installing over 1,500 machines of which 248 were in international markets. We are innovating to drive our sales growth and are pleased with the investment we are making to introduce ‘finer’ coffee concepts, leveraging our new state of the art Roastery and delivering fresher food that our customers will enjoy later this year. Internationally, in Germany we grew our hotel pipeline to five hotels and our Frankfurt hotel received great guest feedback. We continue to have success with our profitable joint venture in the Middle East while our phased withdrawal from South East Asia is on plan. China remains an exciting platform of growth for Costa and we have a clear plan to enhance our business. We have launched five new concept stores, the results of which give us further confidence that we can capitalise on this market opportunity and grow to significant scale. During the year we continued to strengthen our capabilities to support our long-term, growth, including developing the senior team with a number of new hires and promotions. In November we announced a £150 million cost efficiency programme to help offset investment and sector cost pressures. We have made good progress this year in areas such as procurement, supplier consolidation and labour scheduling, which has helped maintain margins. In the year ahead we will continue to focus on organic growth and investing in our customer proposition. This, together with our efficiency programme and disciplined capital management gives us confidence in delivering another year of good progress, in line with overall expectations. Whilst we are only seven weeks into our new financial year Premier Inn has had a good start to the year and Costa has also seen positive like for like sales growth, although we remain cautious and expect a tougher consumer environment than last year. In the longer term we remain confident that, with our significant structural growth opportunities, the power of our brands and the investments we are making, we will continue to deliver strong returns and sustainable long-term growth for our shareholders.” Richard Baker, chairman, said: “Whitbread is one of Britain’s longest established and most successful companies and celebrates 275 years in business this year. We are very aware of our responsibilities to ensure that this great British company continues to thrive and, as such, we are focused on driving growth while managing risk and demonstrating excellent corporate governance. We operate a conservative approach to the management of our balance sheet and this provides us with a solid base in turbulent and changing times. Our strong cash flow generation has enabled us to increase the full year dividend by 6.0% to 95.80 pence.”

Easyhotel signs Nepal and North India franchise deal: Easyhotel, the owner, developer, operator and franchisor of “super budget” branded hotels, has signed a Master Development Partnership with IGC Group UK to develop Easyhotel in Nepal. IGC approached the company and expressed its interest in a franchise agreement to develop Easyhotels in Nepal and North India, a region which attracts 729,550 international and domestic visitors to Nepal alone each year. The franchise agreement is for 300 rooms to be opened within the next three years, with the first hotel to be located in the capital, Kathmandu. This partnership has been signed against a backdrop of continued local government support for growing the budget hotel industry. The new Easyhotels are expected to comprise new purpose-built hotels and conversions of existing hotels and/or office buildings. The first Easyhotel will be located in the Lazimpath area of Kathmandu, the trading hub of Nepal’s capital, and IGC has already secured land and property to accommodate the first 100 rooms which is due to open by the end of 2018. Incentive Group of Companies (IGC) has established itself as a rapidly growing international and domestic travel business with operations in six business sectors; Tour & Trek, Aviation, Cargo, Information Technology, Hospitality and Travel Technology. IGC has hospitality expertise and already operates hotels in the region. Guy Parsons, chief executive of Easyhotel, said: “We are delighted to enter into this new partnership with IGC Nepal which is testament to Easyhotel’s strong brand recognition. IGC has established a significant geographical foothold in the region in a number of business areas, many of which are targeted towards value conscious consumers, which makes them a great cultural fit for Easyhotel. This relationship provides us with the opportunity to extend our network into this attractive market without direct capital investment.” A spokesperson for IGC said: “We are excited to be partnering with the Easyhotel brand. We see a significant gap in the budget sector in the entire region. Currently there are no hotel brands offering a combination of great value and superb quality and we feel that Easyhotel is perfectly designed to take advantage of this opportunity.”

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