Whitbread to boost hotels

Whitbread will create more than 2,500 jobs this year by spending more than £300m on expanding its pub, food retailing and hotel operations.

The expenditure compares with £282m in the year to February and £194m in 1993-94.

Besides expanding existing businesses such as Beefeater, TGI Friday's, Pizza Hut and Travel Inn, the company will develop Hot Shots pool bars, Hogs Head cask ale bars and PJ Peppers, a wine bar.

Whitbread's balance sheet can cope easily with the increased spending. Borrowing as a percentage of shareholders' funds is 2.6 per cent, and cash flow will ensure the figure does not rise much above 6 per cent this year.

Sir Michael Angus, chairman, remained coy, however, about Whitbread's plans for a big acquisition.

The company recently withdrew from bidding for Courage, the second largest brewer in the UK.

He refused to comment on strong rumours that Whitbread was looking to buy Allied Domecq out of its joint brewing venture with Carlsberg, known as Carlsberg-Tetley.

The expansion plans were announced with results for the year to 25 February, which produced underlying growth of 10.1 per cent in profits before tax to £255.1m.

The figures, accompanied by a 7.4 per cent dividend increase to 20.2p, were well received by the City and the shares rose 10p to 573p.

Profits improved in all divisions, encompassing brewing, leased pubs, tied pubs, and restaurants and leisure.

Star performers were Travel Inns, at the budget end of the hotel market, and Beefeater and Brewers Fayre, which are benefiting strongly from the general growth in the eating-out market in the UK.

David Thomas, director of restaurants and leisure, said five more Travel Inns would be opened this year and there were plans "in the pipeline" to add another 25-30 outlets.

This would take the number of hotel rooms from 2,840 to more than 4,000.

New Travel Inns, where possible, will be sited alongside Whitbread's pubs.

Only five of the current 66 hotels are managed separately or on stand- alone sites, with 47 housed next to Beefeater pubs, 13 next to Brewers Fayres, and one at a TGI Friday's.

Budget hotels, typically priced at £34.50 a night for a room for four, is by far the fastest growing part of the hotel market. Whitbread is achieving a 17.5 per cent return on its investment in this business.

Pub food, coupled with a shift in drinking habits to higher-margin premium beers, is also a prime part of the company's expansion plans.

Beefeater's sales rose 7 per cent last year, generating a 12 per cent increase in profits.

Most of the growth is coming from the family sector.

The number of children accompanying adults to a pub restaurant has virtually doubled in the last two years, according to statistics compiled by Taylor Nelson, the market research group.

The group's Pizza Hut business, however, was affected by last year's hot summer weather and profits fell by an unspecified amount.

However, Mr Thomas remained confident about the long-term future despite the fierce price competition in the market.

Investment Column, page 34

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Sheridan Maine: Financial Accountant

£150 - £190 Daily Rate: Sheridan Maine: One of London's leading water supplier...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor