Whitbread promises 12,000 new jobs in five-year expansion for Premier Inn and Costa Coffee chains

Whitbread has vowed to step up expansion of its Premier Inn and Costa chains in a move set to create 12,000 jobs over the next five years (PA/PA Wire)

Whitbread today cranked up expansion plans for its budget hotel chain Premier Inn in the UK and Costa Coffee globally, as the leisure group delivered annual profits ahead of City expectations.

The rollout of the two chains will create an additional 12,000 UK jobs, primarily among young people, over the next five years.

Whitbread plans to add 75,000 rooms to its existing 51,671 at Premier Inn by opening new hotels, with about half of its growth coming from London. Group finance director Nicholas Cadbury said Premier Inn had only a 6 per cent market share in the capital, compared with 7 per cent to 8 per cent in other areas.

“We have historically punched below our weight in London. It has been a good year for Premier Inn in London. We were aided by the benefit from the Olympics Games,” he said.

Operating profits at Premier Inn and its restaurants grew by 5.9 per cent to £313.1 million over the year to February 28, boosted by a 1.7 per cent uplift in revenue per available room — a key measure of profitability for the sector. This helped Whitbread’s pre-tax profits to grow by 11.4 per cent to £356.5 million over the year to February 28, ahead of City forecasts of £350.9 million.

Costa Coffee also made a significant contribution. The UK’s biggest coffee shop chain increased like-for-like sales by 6.8 per cent last year, which means it has delivered 44 consecutive quarters of rising revenues.

This resulted in a 29.3 per cent uplift in operating profit to £90.1 million at Costa, which has 1,578 UK shops.

Costa is on track to hit its five-year target of doubling sales to £1.3 billion by 2016, and now plans to repeat this feat by delivering revenues of £2 billion by 2018.

It aims to add a handful of Costa shops to its existing one in Paris by the end of this year, but the bulk of the overseas expansion will be in China. It currently has 253 outlets in the world’s most populous country but wants 500 by 2016.