Premier Inn owner Whitbread has posted lower profits in the first half of the year as it was weighed down by “difficult” UK trading conditions.
The company saw like-for-like UK accommodation sales decline by 3.6% for the six months to September due to weaker sales outside of London.
Whitbread said that market conditions continued to be “challenging” as consumer confidence remained weak amid “heightened political and economic uncertainty”.
The FTSE 100 company said the slump in confidence has continued into the third quarter and that “near-term market conditions in the UK remain uncertain”.
Adjusted revenue for the half year dipped 0.1% to £1.08 billion, while adjusted pre-tax profit slipped 4.1% to £236 million as margins were squeezed.
Whitbread said profits were dented by weaker domestic hotel demand, particularly in regional areas, where it has 80% of Premier Inn sites.
It also noted that it saw a “greater decline” in the number of short-notice bookings, which are typically priced higher.
Despite this, the company said it “retained a strong balance sheet” as it benefited from the £3.9 billion sale of the Costa Coffee chain to Coca-Cola last year.
The company also reported 7.6% growth in London as it benefited from rapid expansion in the capital over the past three years.
It said it will invest in its hotels by opening more higher-specification Premier Plus rooms in its hotels, with plans for 2,000 of these rooms by the end of next year.
Whitbread also hailed long-term growth opportunities in the German market, where it has increased its accommodation pipeline by 25% over the past year.
Alison Brittain, chief executive officer of Whitbread, said: “We have delivered a resilient first half profit performance despite challenging market conditions in the UK.
“Shorter-term trading conditions in the UK regional market have been difficult, particularly in the business segment where we have a higher proportion of our revenue, whilst trading in London remained strong.
“Against this challenging backdrop, we have a number of activities under way which continue to build our brand strength as the UK’s favourite hotel chain.”