Whitbread’s punchy trading statement last week provided good news in three out of four of its core sectors showing good sales growth.
As ever, the star turn was Premier Travel Inn, the UK’s leading economy hotel chain, with an 8.1% hike in like-for-like sales for the 50 weeks to February 15.
Now that David Lloyd Leisure, the health club chain, has joined PTI and Costa Coffee in the growth camp, there is an easing of pressure on Whitbread’s management to make an immediate move to divest more businesses.
The long-term question marks about DLL remain but the recovery at the business means that any sale can now be conducted in a more orderly fashion and a better price fetched.
Whitbread might, of course, choose to hang on to the chain but in the medium to long term this will no doubt only see the same conglomerate questions being raised.
More interesting from a hotel perspective were hints that PTI might soon be heading to Asia. Talks have been held with potential partners on the sub continent and the Costa Coffee JV partner in China might be interested in extending its relationship by taking on PTI as well.
The next clear indication of strategic direction is likely to come in June when the company announces its refinancing plans. Most bets are now on a securitisation rather than the once mooted REIT conversion.
Deutsche Bank analysts said a securitisation has the advantage of making the group less vulnerable to a consumer downturn than if it converted to a REIT.