Premier Inn owner warns of 6,000 job cuts as coronavirus crisis hits demand

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Premier Inn owner Whitbread has warned it could axe up to 6,000 jobs as the coronavirus crisis continues to hit demand for hotel stays.

The company said that sales in the first half of the year were “significantly down year-on-year” after it had to close most of its hotels and restaurants for the coronavirus lockdown.

It said it was performing ahead of market since being able to re-open and that it had 98% of its hotels operational by the end of the accounting period.

But the company’s hotels are still almost half empty, with occupancy levels reaching only 51% in August. The Eat Out To Help Out scheme had helped restaurant sales but total revenues were still down 38.5% year-on-year in August.

Whitbread is now looking to cut 6,000 jobs – almost a fifth of its workforce – as a result of reduced demand, saying it hopes the reduction can be achieved through voluntary redundancies.

Chief executive Alison Brittain said: “Our teams have worked very hard to reopen our hotels and restaurants and we are now firmly in the ‘restore’ phase of our response to the Covid-19 crisis.

“Our performance following the reopenings has been ahead of the market, however, it has been clear from the beginning of this crisis that even as restrictions are eased and hospitality businesses such as ours reopen their doors, that demand would be materially lower than FY20 levels for a period of time.

“Given this backdrop, we have already taken extensive action to protect the business, retain financial flexibility and position it for long-term success. We continue to work hard to ensure that we emerge from the crisis with a more flexible operating model and a stronger, more resilient business.

“With demand for travel remaining subdued, we are now having to make some very difficult decisions, and it is with great regret that today we are announcing our intention to enter into a consultation process that could result in up to 6,000 redundancies in the UK, of which it is hoped that a significant proportion can be achieved voluntarily.

“In line with our longstanding values of treating our people fairly, our priority is now to ensure that this process is clear and transparent for all colleagues and that everyone impacted is supported throughout.”

Whitbread completed a £1bn rights issue in June, which it said “enhanced both our financial flexibility and our ability to successfully execute our strategy in the UK and Germany”.

Whitbread said the plans come as demand is set to remain subdued in the short to medium-term and with the Government’s furlough scheme coming to an end next month.

The job losses also come on top of cuts to reduce its head office workforce by up to a fifth, impacting around 150 jobs.

Since re-opening more than 800 hotels, demand had been strong in seaside and tourist locations, but was weaker in cities, particularly London.

Whitbread flagged the increased restrictions by the Government to clamp down on a second wave of the pandemic and said it will “continue to closely monitor the situation”.

Ms Brittain said: “Our performance following the reopenings has been ahead of the market, however, it has been clear from the beginning of this crisis that even as restrictions are eased and hospitality businesses such as ours reopen their doors, that demand would be materially lower than full year 2020 levels for a period of time.”


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