Whitbread to cut 6,000 jobs as hotel demand slumps

Shares dropped to their lowest point since March as the company expects subdued demand for the foreseeable future.

Article updated: 22 September 2020 10:00am Author: Ian Forrest

  • Whitbread announced a 75% drop in UK sales for Q2
  • Shares were down 3% in early trading, taking them to their lowest point since March
  • 6000 jobs to be cut representing 18% of the company’s workforce

Whitbread announced its intention to shed 6,000 jobs today as it reported a 75% drop in UK sales in the second quarter. The jobs represent around 18% of the company’s workforce and come despite the fact that 98% of its Premier Inn hotels and restaurants are now open again. While demand in seaside and tourist locations has been strong in recent weeks, the company said bookings in London were still weak and overall sales in August were 39% lower than last year. While business bookings are growing, the company expects overall demand to remain subdued in the short to medium term. Whitbread also said that its German hotel operations are seeing a similar pattern of trading to the UK.

The shares responded negatively to the news with a 3% fall in early trading taking them down to their lowest point since March. While there are signs of some recovery in trading in some parts of the business these are clearly still difficult times for the business and the decision to reduce staff number reflects the management’s assumption that demand will remain subdued for some time to come. The prospect of more restrictions being imposed shortly on the hospitality sector, along with the furlough scheme ending in October, simply add to the challenges the company is facing. The £1bn rights issue earlier in the year helped to bolster the balance sheet but until there are better prospects for trading we continue with our sell recommendation.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.