Whitbread Expected to Report Resilient Winter Trading with Potential for Cost Relief

Whitbread PLC could benefit from robust third-quarter trading figures and the possibility of moderating cost pressures, according to Citi, which has issued a positive outlook ahead of the hospitality group’s results scheduled for next month.

The investment bank anticipates that Whitbread will report revenue per available room, a crucial performance indicator in the hotel sector, marginally above market consensus for the third quarter. Citi’s proprietary tracking data suggests RevPAR growth of approximately 2.2% in the United Kingdom and a considerably stronger 6.8% in Germany, with December trading characterised as solid across both markets.

The Premier Inn brand is expected to demonstrate continued resilience in the UK despite a weaker consumer environment, whilst Germany remains a notable performer as Whitbread expands its presence in what remains a less developed but expanding market.

Citi anticipates that investor attention will focus on cost dynamics, particularly business rates and inflation-linked expenditure. Whitbread has previously provided guidance indicating an increase of £40 million to £50 million in business rates for the 2027 financial year; however, Citi believes this estimate may warrant revision downwards. The bank contends that the midpoint of the guidance appears elevated once transitional relief is factored in, whilst assumptions for non-labour cost inflation of approximately 6.5% also seem excessive.

Such revisions would carry material implications. Whitbread operates a business model characterised by high operating leverage, whereby relatively modest changes in cost structure can produce disproportionate effects on profitability. Whilst recent speculation regarding potential UK policy changes concerning business rates is unlikely to substantially alter the overall outlook, Citi suggests that internal assumptions may yet become more favourable.

The bank maintains a ‘buy’ rating on the shares with a target price of £31, viewing a solid trading update as a potential catalyst for the stock.