Whitbread to cut 6,000 jobs due to falling hotel demand

Whitbread, owner of Premier Inn and Beefeater, warned that 6,000 employees could lose their jobs.

The company blamed the cuts on a drop in the number of hotel guests since the closure.

It comes as the government’s leave plan, which still pays 27,000 Whitbread employees, ends next month.

Meanwhile, pub chain JD Wetherspoon has warned its 1,000 employees who work at airports that almost half of them could lose their jobs due to the dramatic drop in travel and tourism.

The company told staff that up to 450 people could be laid off. “The decision is mainly the result of a slowdown in commerce in these pubs, linked to the large reduction in the number of passengers using the airports,” said Wetherspoon CEO John Hutson, adding that “there have been no made firm decisions. “

The reduction in travelers and people who share a meal has also affected Whitbread. He said hotel stays in August had been cut in half and the number of diners dropped by more than a third, although he said it had been helped by the Eat Out to Help Out scheme.

The company could also be affected by new rules that force restaurants to close at 10pm. Starting Thursday, hospitality venues will need to close early to help slow the spread of the coronavirus.

Adding 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” on health workers. bars and restaurants in the city center.

“This is a huge blow to hospitality and it will be potentially fatal for many companies,” he said.

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

‘Difficult decisions’

Whitbread boss Alison Brittain said the company hoped to avoid mandatory layoffs.

She said: ‘With travel demand still subdued, we now have some very difficult decisions to make, and we are very sorry that today we announce our intention to start a consultation process that could result in up to 6,000 layoffs in the UK, from which is expected that a significant proportion can be achieved voluntarily. “

About three-quarters of Whitbread’s 35,000 employees still receive payments in part through the government’s leave plan.

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

Since July, workers on leave can go back to work part-time and the government pays for the remaining hours not worked.

Another change was introduced earlier this month when employers were asked to pay 10% of the salaries of those on leave, plus their contributions to National Insurance and pension.

In October, the government will pay 60% of salaries up to a limit of £ 1,875. Employers’ share of the bill will increase to 20% of wages.

And the scheme will cease entirely by the end of next month, shortly before the completion of Whitbread’s 45-day consultation period for workers notified of layoffs.

The firm said it had made the decision in light of moderate demand, noting that it would stop receiving help with staff salaries at the end of next month.

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

Hotel sales were 78% lower in the first half of the year, compared to 2019, while food and beverage sales were down 77%.

“The Premier Inn owner has had one of the most difficult first halves,” said Emilie Stevens, an analyst at Hargreaves Lansdown.

He said the proposed job losses were a sign that the coronavirus had “changed the world of Whitbread forever.”

“Without full hotels, the group is not profitable, so a lower and flexible cost base is essential,” he said.

‘Short-lived boost’

Since the reopening, Whitbread said demand for hotel rooms had been “strong” in tourist spots, but London and other metropolitan areas had been less popular.

But Ms Stevens said: “Unfortunately, this push is likely to be short-lived and the focus is now on business travel.”

“We know that demand from the city remains moderate and with more and more companies advertising permanent jobs based on house plans, we wonder if the return of business travelers is more ‘if’ than ‘when’.”

The projected job losses, which make up about a fifth of Whitbread’s workforce, follow cuts in the company’s head office staff, which affected about 150 people.

The company’s shares lost around 2.5% of their value shortly after the London markets opened.

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