Performance at the Premier Inn budget hotel chain is likely to be in focus when Whitbread, the FTSE 100- listed hospitality group, posts its preliminary results tomorrow. Until recently, demand for cheaper hotel rooms has kept Premier safe from the sharp economic headwinds that are blowing across these isles. But the picture showed signs of unravelling in March, when a trading statement revealed that lower occupancy rates at the budget business had begun to drag on group like-for-like sales.
The concerns returned to the fore last week, when Fitch, the ratings agency, switched its ratings outlook on Whitbread to negative, voicing concerns about tougher conditions in the domestic hotels market.
Analysts at KBC Peel Hunt also reiterated their cautious view, saying that Premier's cut-price offer works best in a market that is well stocked with high-cost hotel rooms, but may prove less convincing in an environment where sliding occupancy rates spur bigger chains to cut prices.
The broker added: "In the leisure market, independent operators, particularly in the four-star segment, are already slashing prices, and anecdotal evidence from distribution platforms such as [Holidaybreak's Superbreak] and [TUI Travel's LateRooms.com] suggest that this is helping to create demand." The group's pension pot is also likely to attract attention, with the gross deficit having jumped from £33m to £153m.
Today: Aviva is expected to provide an update on its capital cushion when it posts a first-quarter update this morning, but there is unlikely to be any news on the outlook for the dividend, according to Panmure Gordon.
"We found it mildly amusing that the 33 per cent share price fall on the day of the preliminary announcement was explained by many as because Aviva maintained its dividend, whilst [earlier last week] a 7.5 per cent fall in the share price was explained as being because it might cut the dividend," the broker noted, saying that it had already cut its 2009 full-year dividend forecast by 40 per cent to 19.8p per share.
Also today, JJB Sports is scheduled to hold the first of two important meetings. The first, which will begin at 11am, will enable creditors to vote on the proposed company voluntary arrangement (CVA), which requires approval by more than 75 per cent of unsecured creditors by value. The meeting is expected to run until late in the day, and the results may not be revealed until tomorrow. The next meeting, which is due be held on Wednesday, will ask the retailer's shareholders to approve the CVA.
Results/updates: ASOS, Bodycote, F&C Asset Management, Aviva. Others: JJB Sports creditors to vote on CVA.
Tomorrow: BP's first-quarter figures are likely to show a "substantial improvement" on the previous quarter, according to Deutsche Bank. The recovery hopes are predicated on the removal of the around $500m-$600m worth of negative impact from pipeline stock losses, and the likely benefits of improved trading conditions and the return to full capability of the company's Texas City refinery.
Results/updates:BP, Drax, Carpetright, St James's Place, Friends Provident, Reckitt Benckiser, Whitbread, WPP.
wednesday: Punch Taverns is due to publish interim results, and the sharp like-for-like sales decline seen in the pubs group's first quarter should have halted, according to KBC Peel Hunt, which cites evidence of improved trading conditions from Marston's, Greene King and Enterprise Inns.
The broker also weighed in on Punch's debt situation, highlighting the possibility of disposals. "Following its £21m disposal of managed pubs from [the] Spirit [division] to Fuller's, Punch has disposed of over £30m of pubs to date, against our annual target of £60m," it said. "We believe the rights issue by Greene King is of particular interest here, since Greene King is specifically looking for food pubs (which implies managed) and has up to £140m to spend."
Results/updates: Fenner, Harvey Nash, HMV, Home Retail Group, Arm, BG, Hochschild Mining, Shell, Wolfson Microelectronics, Punch Taverns.
Thursday: Third-quarter numbers from BSkyB are expected to be dampened by the HD marketing campaign launched earlier this year, but firm nonetheless, with sales expected to climb to £1.3bn, up 7 per cent, and earnings before tax, interest and amortisation charges pegged to rise to £213m, up 2 per cent.
Results/updates: Cadbury, Taylor Wimpey, William Hill, Anglo American, AstraZeneca, Galiform, Kazakhmys, Shire, Standard Life, BSkyB.
Friday: Results/updates: Forth Ports, Rentokil Initial.