Terror hits Premier Inn owner Whitbread as weak pound cools Costa Coffee

Bookings at Premier Inn stumbled immediately after the terror attacks at London Bridge, Westminster and Manchester – but the weak pound means tourists will keep flocking to the UK.

So says Alison Brittain, chief executive of Premier parent Whitbread, whose Costa Coffee arm is also seeing declining sales growth.

Whitbread had a good start to the year, with sales up 2.9% in the first quarter. They were up just 1.1% at Costa Coffee as the nation enjoyed sunshine. Costa is rolling out a “Cold Brew” plan that sees over 200 stores pushing Frostino and other cooler drinks.

Business travellers and tourists still like Premier Inn. Brittain said: “Westminster and Manchester saw a drop off in the days following the attacks and then a rapid rebound. We haven’t yet seen what will happen with London Bridge. We are seeing the drop and people are re-planning some of their events. But there is still a very strong drive of tourists into London.”

The weak pound makes coffee bought from abroad more expensive, but Whitbread is hedged for the year against further falls in sterling against the dollar.

With consumer confidence falling, some City analysts warn that Costa will be hit as people cut back.

Brittain said people are cutting back on big ticket items, not Whitbread’s “affordable treats”.

“We are resilient to a consumer squeeze,” she said. “But not immune.”

Langton Capital, the Leisure sector experts, say “Whitbread’s Premier Inn bounce is impressive but the continued slowdown at Costa, at least in terms of Like for like sales, may be a worry to some”.

Whitbread shares rallied 178p to 4031p.

Julie Palmer, Partner at Begbies Traynor, said: “Although Whitbread has made a good start to its new financial year, the Group still faces significant headwinds, with rising wage costs linked to its labour-intensive structure, wavering consumer confidence and higher input costs on account of ongoing sterling weakness.

“With all of these challenges coming to the fore at once, within an increasingly delicate UK economic and political environment, only time will tell whether the business can maintain this positive momentum over the remainder of the year.”