Whitbread to cut 6,000 jobs as hotel demand slumps

Whitbread, which owns Premier Inn and Beefeater, has warned that 6,000 staff could lose their jobs.

The company blamed the cuts on a slump in hotel guest numbers since lockdown.

It comes as the government's furlough scheme, which still pays 27,000 Whitbread staff, ends next month.

Meanwhile, pub chain JD Wetherspoon has warned its 1,000 staff who work at airport venues that almost half of them could lose their jobs because of the dramatic fall in travel and tourism.

The company told staff that up to 450 people working at pubs in Gatwick, Heathrow, Stansted, Birmingham, Edinburgh and Glasgow airports could be made redundant. "The decision is mainly a result of a downturn in trade in these pubs, linked with the large reduction in passenger numbers using the airports," said Wetherspoon's chief executive John Hutson, who added that "no firm decisions have been made".

The reduction in travellers and those sharing a meal out has also hurt Whitbread. It said hotel stays in August had halved and diner numbers fell by more than a third, though said it had been helped by the Eat Out to Help Out scheme.

The company could also be affected by new rules forcing restaurants to shut at 22:00. From Thursday, hospitality venues will have to close earlier to help curb the spread of the coronavirus.

Added to this, Cabinet Office Minister Michael Gove has told people in England to now work from home "if they can" - a move that trade body UK Hospitality said was "effectively a lockdown" for city centre bars and restaurants.

"This is a huge, huge blow to hospitality and it will be potentially fatal for many businesses," it said.

Whitbread said it expected demand to remain lower across the business well into 2021 and possibly even 2022.

Whitbread boss Alison Brittain said the company was hoping to avoid compulsory redundancies.

She said: "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."

Around three quarters of Whitbread's 35,000 staff are still paid in part through the government's furlough scheme.

That scheme, called officially the Coronavirus Job Retention Scheme (CJRS) was introduced in March. It paid 80% of the wages of workers placed on leave, up to a maximum of £2,500 a month.

Since July, furloughed workers have been able to return to work part-time with the government paying for any remaining hours not worked.

A further change was brought in at the beginning of this month when employers were asked to pay 10% of the wages of those on furlough, plus their National Insurance and pension contributions.

In October, the government will pay 60% of wages up to a cap of £1,875. The employers' share of the bill will then go up to 20% of wages.

And the scheme will cease altogether at the end of next month, shortly before the Whitbread's 45-day consultation period will be completed for workers put on notice of redundancy.

The firm said it had taken the decision in the face of subdued demand, noting that it would stop receiving help with staff wages at the end of next month.

Whitbread said it had lost more than three quarters of its sales in the first half the year when hotels and restaurants were forced to close because of the virus.

Sales in hotels were 78% lower in the first half of the year, compared to 2019, while food and drink sales were down by 77%.

"The Premier Inn owner has had one of the toughest first halves out there," said Hargreaves Lansdown analyst Emilie Stevens.

She said the proposed job losses were a sign that coronavirus had "changed Whitbread's world for good".

"Without full hotels the group isn't profitable, so a lower and more flexible cost base is essential," she said.

Since reopening, Whitbread said demand for hotel rooms had been "strong" in tourist hotspots but London and other metropolitan areas had been less popular.

But Ms Stevens said: "Unfortunately this boost is likely to be short-lived and focus now turns to business travel."

"We know city demand remains subdued and with more and more businesses announcing permanent work from home plans, we wonder if the return of business travellers is more 'if' than 'when'."

The expected job losses, which account for around a fifth of Whitbread's workforce, follow cuts to the company's head office staff, which affected around 150 people.

Whitbread is not the first hospitality business that has been forced to lay off staff because to the pandemic. In June, The Restaurant Group - which owns Frankie and Benny's - announced plans to cut up to 3,000 workers, while Upper Crust-owner SSP has said that up to 5,000 could be let go and Pizza Express warned 1,100 people could lose their jobs.

Last month, hotel group LGH - which manages 55 properties, including some Crowne Plaza, Holiday Inn and Hallmark hotels - said that around 1,500 staff were at risk of redundancy.

By late morning trading, shares in Whitbread had lost around 2% of their value.

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