Britain's biggest hotel operator Whitbread said sales growth slowed in its third quarter as tough economic conditions kept customers away from its Premier Inn hotels and Costa Coffee shops, which had previously proved resilient.
The group, which also owns the Beefeater and Brewers Fayre pub restaurant chains, said on Tuesday sales at outlets open more than a year rose 2.4 percent in the third quarter to December 1. In the first half, comparable sales had risen by 3.3 percent.
Sales at Premier Inn hotels open more than a year were up 2.6 percent in the quarter, compared with growth of 5.2 percent in the first half. Sales at Costa Coffee shops on the same basis were up 3.8 percent compared with growth of 6.7 percent in the first half.
However, total sales grew by 11.4 percent.
I would say this is a reflection of the general economic climate but I would say that's pretty impressive growth in total sales, Chief Executive Andy Harrison told reporters on a conference call.
At 1015 GMT, Whitbread shares, which have outperformed the FTSE All Share Travel & Leisure Index <.FTASX5750> by 11 percent since the start of the year, were down 4.7 percent to 1,502 pence, the biggest drop on the benchmark FTSE-100 index <.FTSE>.
Evolution analyst Nigel Parson said Whitbread's top line growth had been as strong as ever but noted the slowdown in comparable sales growth.
Slowing like-for-like sales may prompt profit-taking today but we would use this potential opportunity to pick up stock, Parson said. Whitbread's clear value propositions resonate strongly with customers and its strong balance sheet allows it to continue to grow at the expense of weaker competitors.
Premier Inn has performed strongly through the economic downturn, benefiting from business customers trading down from four and five star hotels, and a 29 pounds per room offer wooing leisure customers in off-peak periods.
Costa has also fared well, tempting consumers seeking an affordable luxury during the downturn, and also benefiting from aggressive international expansion.
Whitbread said recent trading month by month had been variable in a challenging consumer environment but Premier Inn had continued to win market share.
For the first nine months of the year, Premier Inn had increased the total number of room nights sold by 7.4 percent to 9.6 million with room rates up 2.1 percent.
Revenue per available room (RevPAR) -- a key industry measure -- grew by 9.4 percent in London, which has been more resilient through the downturn, and 2 percent in the provinces.
Harrison said Whitbread shared the view of economists that the British economy would be broadly flat next year.
Britain's economy grew by 0.5 percent in the third quarter of this year.
Harrison said the company was on track to achieve its targets to expand Premier Inn to over 65,000 rooms in Britain from 44,000 currently by February 2016 and to grow Costa Coffee to over 3,500 shops worldwide from around 2,000 at present.
The company said it also remained on course to meet full year expectations. Market expectations for Whitbread's full-year pretax profit currently range between 301 million and 329 million pounds, with the average standing at 314 million pounds, according to a Thomson Reuters I/B/E/S poll of 20 analysts.
(Reporting by Matt Scuffham; Editing by Adveith Nair and Mark Potter)