Whitbread's costs to rise by up to £30m as it hikes staff pay

Premier Inn owner Whitbread has revealed that it plans to spend millions of pounds on pay rises and site refurbishments this year amid ongoing labour shortages in the hospitality sector.

The budget hotel group already hiked wages and launched a staff retention bonus scheme in 2021.

In its first quarter trading update on Wednesday, Whitbread said it planned to invest £20m - £30m in labour, refurbishments, and IT in this fiscal year.

The company said: "Labour supply remains tight across the hospitality sector and assuming that consumer demand and occupancy remain strong, we expect some additional costs due to targeted pay increases."

Chief executive Alison Brittain previously said her company’s historically low churn rate, combined with its program for training young workers, had helped keep employees on the payroll amid the staffing crisis.

Whitbread bosses said that despite the expected £20m - £30m cash allocation, the group's high levels of occupancy and strong sales meant they were “confident” of its continued margin recovery in the UK this year.

The FTSE 100 giant, which also owns pub chain Brewers Fayre and steakhouses Beefeater and Bar and Block, reported "very strong trading ahead of expectations" for its first quarter in both its core UK market and in Germany, where it has been pursuing expansion.

Whitbread said its UK like-for-like accommodation sales were up 21.3% in the three months to 2 June, compared with the same period pre-Covid in 2019.

However, UK food and beverage sales were still 4.3% down on levels seen in the same quarter in 2019. Whitbread said it plans to roll out new menus and targeted marketing initiatives to help boost sales.

The group, which completed a £1b rights issue in June 2020 to help see it through lockdowns, said it had benefited from "the continued decline of the independent hotel sector" in the period.

Brittain said: "The strength of Premier Inn's recovery in the UK continues to be ahead of expectations.

"This impressive Q1 performance together with improved visibility into Q2, gives us increased confidence in delivering a strong first half and remaining ahead of the market for the rest of the year."