Whitbread Q1 FY26 earnings preview: strategic progress amid market headwinds
Premier Inn owner Whitbread is set to release its Q1 FY26 trading update on 19 June, following a challenging FY25 marked by declining profits but strategic progress in key markets.
FY25 financial performance reflects challenging conditions
As Whitbread PLC, the owner of Premier Inn, approaches its first quarter (Q1) of fiscal year 26 (FY26) trading update on 19 June, investors are reflecting on the company's fiscal year 25 (FY25) performance and its strategic direction.
For the fiscal year ending 27 February, 2025, Whitbread reported revenue of £2.92 billion, a slight decline from £2.96 billion in fiscal year 24 (FY24). Adjusted profit before tax fell 14% year-over-year (YoY) to £483 million, while earnings per share (EPS) dropped close to 6% to 193.4p from FY24 levels. Despite these declines, the company maintained its dividend at 97.0p per share, demonstrating management's confidence in the underlying business resilience and cash generation capabilities.
The financial results reflect the challenging operating environment facing the UK hospitality sector, including cost inflation, economic uncertainty, and changing consumer behaviour patterns following the post-pandemic recovery period.
UK operations show resilience in difficult market
Whitbread's UK accommodation sales remained flat YoY, outperforming the mid-scale and economy market by 0.7 percentage points. This relative outperformance demonstrates the strength of the Premier Inn brand and its competitive positioning during challenging market conditions.
The company is executing its Accelerating Growth Plan (AGP), which includes converting 112 underperforming restaurants into 3,500 new hotel rooms and selling 126 outlets. This strategic repositioning focuses resources on the higher-returning accommodation business while exiting underperforming food and beverage operations.
The restaurant-to-rooms conversion strategy addresses two challenges simultaneously: improving returns from underperforming assets while adding accommodation capacity in attractive locations without significant additional property acquisition costs.
This operational transformation reflects management's disciplined approach to capital allocation, prioritising investments in the core Premier Inn accommodation business where Whitbread maintains clear competitive advantages and stronger profit margins.
German expansion drives international growth
The German market showed strong performance, with accommodation sales increasing by 21% compared to FY24. Revenue per available room (RevPAR) in Germany experienced double-digit growth, reflecting the successful maturation of the estate.
This exceptional German performance validates Whitbread's international expansion strategy and demonstrates that the Premier Inn concept can be successfully adapted for European markets beyond the UK home base.
The strong RevPAR growth in Germany indicates both higher occupancy rates and improved pricing power, suggesting that German customers are responding positively to the Premier Inn value proposition and service standards.
Germany represents a significant long-term growth opportunity for Whitbread, providing diversification away from the UK market while leveraging the company's operational expertise and brand strength in a large European economy.
Cost efficiency programme delivers results
Whitbread achieved £75 million in efficiency savings, surpassing its previous guidance and demonstrating effective operational management during a period of cost inflation. The company anticipates further cost efficiencies of £60 million in FY26, aiming to offset expected UK cost inflation of 5-6% due to recent payroll tax hikes.
These efficiency savings reflect systematic improvements across operations, including technology adoption, process optimisation, and workforce productivity enhancements. The company's ability to exceed efficiency targets provides confidence in its operational capabilities.
The anticipated £60 million in additional FY26 savings will be crucial for maintaining margins in the face of significant cost pressures, particularly from increased employer national insurance contributions and minimum wage increases affecting the labour-intensive hospitality sector.
Whitbread's cost management capabilities distinguish it from competitors and provide operational leverage as trading conditions improve, potentially driving margin expansion when revenue growth returns.
Strategic vision and long-term targets
Looking ahead, the company remains confident in its Five-Year Plan, targeting incremental adjusted profit before tax of at least £300 million by fiscal year 30 (FY30). The plan includes expanding to 98,000 rooms in the UK and 20,000 rooms in Germany by 2030.
This ambitious expansion plan represents substantial growth from current capacity levels, requiring significant capital investment and operational scaling. The £300 million incremental profit target suggests management confidence in both market demand and execution capabilities.
The room expansion targets imply annual additions of approximately 8,000-10,000 rooms across both markets, representing a substantial growth rate that will require effective site identification, development management, and operational scaling.
Success in achieving these targets would position Whitbread as a dominant force in both the UK budget hotel market and establish a significant presence in Germany's attractive hospitality sector.
Capital allocation and shareholder returns
Whitbread announced a £250 million share buyback programme to be completed over the next 12 months, reinforcing its commitment to returning value to shareholders while maintaining dividend payments and funding growth investments.
This substantial buyback programme demonstrates the company's strong cash generation capabilities and management's view that the current share price undervalues the business prospects.
The combination of maintained dividend payments and share buybacks provides attractive returns to shareholders while the company executes its strategic transformation and expansion plans.
Balancing growth investment, shareholder returns, and financial flexibility requires careful capital allocation discipline, particularly given the substantial expansion targets and ongoing operational challenges in the core UK market.
Market outlook and analyst sentiment
Analysts maintain a positive outlook on Whitbread, with a LSEG Data & Analytics consensus "Buy" rating and a median 12-month price target of 3,406.88 pence, representing a 17% upside from current levels (as of 12/06/2025). The company's strategic initiatives and strong performance in Germany are viewed as key drivers for future growth.
Whitbread LSEG Data & Analytics chart
Whitbread has a TipRanks Smart Score of ‘4 Neutral’ but is rated as a ‘strong buy’ with 7 ’buy’ and 2 ‘hold’ recommendations (as of 12/06/2025).
Whitbread TipRanks Smart Score chart
The analyst consensus reflects confidence in Whitbread's strategic direction despite near-term headwinds, with the German growth story and operational efficiency programmes providing multiple drivers for improved performance.
The 17% implied upside from current levels suggests that the market may be undervaluing Whitbread's transformation potential and the long-term growth opportunities in both UK and German markets.
However, execution risk remains significant given the ambitious expansion targets and challenging UK operating environment, requiring continued operational excellence and strategic discipline.
Whitbread technical analysis
The Whitbread share price, down around 5% year-to-date, has been rejected by its 2,915p May and early June highs and may short-term slide towards its 15 May low at 2,739p.
Were this level to give way, a slip back towards the late February high at 2,707p may be at hand with the 55-day simple moving average (SMA) at 2,676p representing another possible downside target.
Whitbread daily candlestick chart
A daily chart close above the 2,915p high is needed for the December 2024 peak at 2,994p and the psychological 3,000p region to be reached next.
The next higher January double peak at 3,049-to-3,053p represents another technical upside target ahead of the October 2024 peak at 3,352p.
The Whitbread share price is expected to remain medium-term bullish while the 15 May low at 2,739p underpins.
Trading considerations for the Q1 update
For investors considering Whitbread ahead of the Q1 FY26 trading update, several factors will be crucial in determining the company's progress and future prospects.
- Research Whitbread's strategic transformation, competitive positioning, and execution capabilities to understand the investment opportunity in UK hospitality.
- Consider how consumer spending trends, travel patterns, and cost inflation might impact the company's performance.
- Open an account with IG by visiting our website and completing the application process.
- Search for 'Whitbread' or its ticker 'WTB' on our trading platform or app.
- Consider appropriate position sizing given the cyclical nature of hospitality stocks and their sensitivity to economic conditions.
Share dealing provides direct exposure to Whitbread's transformation story and dividend yield for long-term investors who believe in the Premier Inn growth strategy.
Spread betting and CFD trading offer flexible approaches for trading around earnings announcements and strategic updates in the hospitality sector.
As Whitbread prepares to release its Q1 FY26 trading update, stakeholders will be closely monitoring the company's progress in executing its strategic initiatives and navigating the evolving market landscape. The combination of operational challenges and strategic opportunities creates both risks and potential rewards for investors in this leading UK hospitality business.
Connect with us
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Professional clients trading spread bets and CFDs can lose more than they deposit.
Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage. They’re not suitable for most investors. Before you invest, you should consider whether you understand how options and futures work, the risks of trading these instruments and whether you can afford to lose more than your original investment.
Trading stocks and shares ‘on margin’ within a US options and futures account – meaning that you only finance part of the cost of acquiring a position in a security – carries additional risks over buying securities on a fully funded basis and may result in losses exceeding your original investment. Trading on margin will also result in additional costs to you as the investor and any securities purchased using margin may be held as collateral by the lender, restricting both your rights as shareholder, and your ability to use the securities until the margin trade is closed. You should familiarise yourself with these risks before trading on margin.
The value of shares, ETFs and other ETPs bought through a share dealing account, a US options and futures account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.
Share dealing and IG Smart Portfolio accounts provided by IG Trading and Investments Ltd, CFD accounts and US options and futures accounts are provided by IG Markets Ltd, spread betting provided by IG Index Ltd.
IG is a trading name of IG Trading and Investments Ltd (a company registered in England and Wales under number 11628764), IG Markets Ltd (a company registered in England and Wales under number 04008957) and IG Index Ltd (a company registered in England and Wales under number 01190902). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. IG Markets Ltd (Register number 195355), IG Trading and Investments Ltd (Register Number 944492) and IG Index Ltd (Register number 114059) are authorised and regulated by the Financial Conduct Authority.
The information on this site isn’t directed at residents of the United States, Belgium or any particular country outside the UK and isn’t intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.