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Tue 22nd Sep 2020 - Whitbread plans 6,000 redundancies – 18% of total workforce
Whitbread plans 6,000 redundancies – 18% of total workforce: Whitbread has reported total sales in its First Half to 27 August were down 77.2% year-on-year reflecting the closure of the vast majority of its hotels and restaurants for a large part of the period – and is to consult on 6,000 redundancies, which is 18% of its total workforce. The company stated: “When able, hotels and restaurants reopened quickly and safely, with the majority of the estate in the UK open by the start of August, and 98% of hotels open by the end of H1. Since reopening, UK accommodation sales performance has been ahead of the market, benefitting from the fast reopening, the strength of the Premier Inn brand and our leading customer proposition. We have seen strong demand in tourist locations, while market demand remained subdued in metropolitan areas and London. Across our entire UK estate, occupancy levels steadily improved on a weekly basis, averaging 51% in August, while UK Restaurant performance was boosted by the positive impact of the Eat Out To Help Out scheme. August UK total sales (accommodation and food and beverage) improved to 38.5% down year-on-year. A rapid and robust operational response at the start of the crisis helped protect our teams, guests and the continuity of the business, and ensured the safe reopening of our hotels and restaurants with strong social distancing and hygiene standards. Our financial response included significant reductions in discretionary spend and capital expenditure, suspension of the dividend, voluntary pay cuts for the board and management team, and use of UK and German government support packages. The completion of a £1bn rights issue enhanced both our financial flexibility and our ability to successfully execute our strategy in the UK and Germany. We continue to focus on taking measured and appropriate action, at the right time, to protect the business. With market demand expected to remain at lower levels in the short to medium-term, we have now taken the very difficult decision to announce our intention to enter into consultation on proposals that could result in up to 6,000 redundancies for our hotel and restaurant colleagues (representing 18% of our total workforce). We expect a significant proportion of these redundancies to be achieved voluntarily. Our priority now is to ensure that the process is fair and that impacted colleagues are supported throughout. This is a regrettable but necessary step to ensure that we emerge from the crisis with a lower cost base, a more flexible operating model and a stronger more resilient business. In line with previous announcements, we expect demand to remain subdued in the short to medium-term and the UK government’s furlough scheme to come to an end in October. We have taken the very difficult decision to announce our intention to enter into consultation with our UK hotel and restaurant colleagues on proposals that could result in up to 6,000 redundancies, of which it is hoped that a significant proportion can be achieved voluntarily, along with reductions in contracted hours for a proportion of our colleagues. These changes create a more flexible labour model that can adapt with changes in the demand environment going forward. Our priority is to ensure that the process is fair and that impacted colleagues are supported throughout. Trading in the first two weeks of September saw year-on-year total accommodation sales remain ahead of the market. Bookings in tourist destinations remain strong, and business bookings are growing, albeit from a low base. September and October are traditionally a period when business bookings pick-up after the quiet summer period, however at this point it is too early to assess the impact of covid-19 on this traditionally busy booking period. We also note recent UK government announcements regarding increased local and regional lockdowns and we will continue to closely monitor the situation.” Chief executive Alison Brittain said: “Our teams have worked very hard to reopen our hotels and restaurants and we are now firmly in the ‘restore’ phase of our response to the covid-19 crisis. Our performance following the reopenings has been ahead of the market, however, it has been clear from the beginning of this crisis that even as restrictions are eased and hospitality businesses such as ours reopen their doors, that demand would be materially lower than FY20 levels for a period of time. Given this backdrop, we have already taken extensive action to protect the business, retain financial flexibility and position it for long-term success. We continue to work hard to ensure that we emerge from the crisis with a more flexible operating model and a stronger, more resilient business. With demand for travel remaining subdued, we are now having to make some very difficult decisions, and it is with great regret that today we are announcing our intention to enter into a consultation process that could result in up to 6,000 redundancies in the UK, of which it is hoped that a significant proportion can be achieved voluntarily. In line with our longstanding values of treating our people fairly, our priority is now to ensure that this process is clear and transparent for all colleagues and that everyone impacted is supported throughout. We will continue to focus on the safety of our guests and teams and the continuity of our business. Maintaining our financial flexibility alongside our leading operating model and powerful brand will allow Whitbread to pursue enhanced long-term structural growth opportunities both in the UK and Germany. This will leave us in a position of strength to continue to invest, increase market share, support our colleagues, guests and suppliers and create value for shareholders.”


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