• Volatility at Premier Inn

Lower occupancy at Premier Inn has impacted sales at Whitbread in the past two months.

But the numbers show volatility rather than predicting any clear trend with six weeks of outperformance and seven weeks of falls in the 13 weeks to February 12.

Chief executive Alan Parker was clear that the year ahead will be challenging but he vowed to achieve better revpar numbers than Premier Inn's rivals.

Analysts at ABN Amro / Royal Bank of Scotland said in the 11 weeks to February 12, weeks 40 to 50 of Whitbread's financial year, Premier Inn saw a drop of 2.0% in sales.

This compares to a rise of 10.7% in the first 13 weeks and a 5.8% rise in the weeks 25 to 39.

The final quarter of Whitbread's financial year is usually the weakest for Premier Inn and so the occupancy drop as the year has progressed (about eight percentage points in the final quarter) is less alarming than appears. Parker made clear that he would not allow occupancy to full below 70% for the new financial year as a whole.

Some price cuts have been implemented in difficult markets which include some city centre sites and particularly Heathrow. The hotels in and around Heathrow have been hit both by the decline in passenger numbers and by what Parker described as "intense new competition".

Despite these cuts, Parker added that it was "wrong to say we don't have pricing power". In general, Premier Inn is going to maintain its rates this year, he claimed, although this was somewhat contradicted by his assertion that Premier Inn would take whatever action needed to maintain market share.

During the fiscal year 2008/09, just over 40,000 rooms have been opened at 54 new hotels including 11 on joint sites. In the new fiscal year, however, the number of projected new hotels is just 12. The pipeline for the year totals 1,700 rooms including 250 that will be extensions on existing properties.

The projected capex at the group for the year is just £170m, half of the spend for the year just ended. This means the group should have the same level of cashflow in the current year as in the last, said Parker.

For the 50 weeks to February 12, Whitbread's total like-for-like sales were 4.9% with Premier Inn achieving 6.2%.

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