Whitbread boosted by budget hotels

By Matthew Scuffham

LONDON (Reuters) - Whitbread (WTB.L), Britain's biggest hotel and restaurants operator, is weathering a slowdown in consumer spending as its budget hotel chain Premier Inn benefits from customers becoming more cost conscious.

The group reported a 7.1 percent rise in like-for-like sales in the 13 weeks to May 29 and said Premier Inn, which accounts for about 70 percent of group earnings, continued to outperform the wider hotel market.

However Chief Executive Alan Parker told the company's annual shareholders' meeting (AGM) the group remains cautious "should the consumer environment become more challenging".

Shares in Whitbread were 5.1 percent higher at 1,285 pence at 2 p.m. The shares have outperformed the FTSE All Share Travel & Leisure Index .FTASX5750 by 13 percent since the start of the year.

"Whitbread has posted a very strong AGM trading update with excellent progress across all three business areas," said analyst Wyn Ellis at brokerage Numis, who reiterated his "add" recommendation and 1,408 pence price target.

Ellis said he anticipated raising his current-year earnings per share forecast by at least 5 percent from 88.7 pence.

Whitbread said Premier Inn, which has over 35,000 rooms in more than 500 hotels in the UK, increased like-for-like sales by 10.7 percent in the 13 weeks to May 29.

The group has spent 21 million pounds ($41 million) rebranding and refurbishing the hotels, which were previously called Premier Travel Inn. "The rebranding exercise is close to completion and has been well received," said Parker.