Whitbread seeks 50% reduction in December quarter's rent from landlords
Premier Inn owner Whitbread has written to around 200 of its landlords seeking a 50% reduction in rent for the December quarter.
Whitbread has paid landlords in full over the past year, including during the first lockdown. However, the group reported a net cash outflow of £462m, despite cost-cutting measures including a 20% reduction of its head office teams, more than 1,500 redundancies from its hotels and restaurants, and significant reductions in maximum contracted hours for remaining employees, for the six months to 30 August 2020.
In the letter, seen by The Caterer, the group said occupancy levels remained very low at around 25% in November during the second lockdown, and total hospitality market sales were down 79% year-on-year. It added that the rent reduction would support Whitbread to weather both historical and continued closures and restrictions and keep a strong balance sheet.
A spokesperson for Whitbread said: "Since the start of the Covid-19 pandemic, Whitbread has taken decisive action to ensure that our cost base reflects the low levels of demand, with the support of a wide range of stakeholders, including shareholders, lenders, colleagues and suppliers. The actions we have taken, combined with the strength of the Premier Inn brand and our leading customer proposition, mean that we continue to trade ahead of the market.
"Throughout the pandemic to date, we have paid our rent commitments in full, even when our hotels and restaurants were forced to close. With ongoing government restrictions expected to result in subdued market demand into the first half of 2021, we are now asking our landlords to support us, as other stakeholders have during the pandemic, through a reduction in rent for the December quarter in recognition of the current environment.
"The business had arrived at this decision ahead of the most recent government update on Saturday 19 December".
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