Whitbread

[Bubblesofearth]

Surge in demand for hols at home should help Whitbread (Premier Inns). Also helped by furlough and 50% eating discounts.

Share price is down heavily so is now a good buying opportunity?

I own some but thinking of buying more.

Thoughts?

BoE

[dealtn]

Surge in demand for hols at home should help Whitbread (Premier Inns). Also helped by furlough and 50% eating discounts.

Share price is down heavily so is now a good buying opportunity?

I own some but thinking of buying more.

Thoughts?

BoE

Where's the evidence for a surge in demand for holidays at home, and specifically for Premier Inns?

[dealtn]

Surge in demand for hols at home should help Whitbread (Premier Inns). Also helped by furlough and 50% eating discounts.

Share price is down heavily so is now a good buying opportunity?

I own some but thinking of buying more.

Thoughts?

BoE

Where's the evidence for a surge in demand for holidays at home, and specifically for Premier Inns?

Found this.

https://www.bbc.co.uk/news/business-53570111

It's not particularly specific, but the suggestion is the most demand is for self-catering or self-isolating types of accommodation. Can you expand on your business case for why Whitbread is a good investment proposition please?

[Bubblesofearth]

Found this.

https://www.bbc.co.uk/news/business-53570111

It's not particularly specific, but the suggestion is the most demand is for self-catering or self-isolating types of accommodation. Can you expand on your business case for why Whitbread is a good investment proposition please?

Not by much. Just looking at what they provide relative to what I believe could be lasting trends. Pretty much the same way as I did for RB around the beginning of the pandemic. I do use Premier Inns a lot myself, especially on golfing trips, and have always been impressed with the value they offer. So chuck in a bit of gut feel I guess.

BoE

[Dod101]

I think it is a bit hard on B0fE to expect him or anyone else to be very specific on evidence for every move. It is not difficult to see that Premier Inns could be a beneficiary of staycations, especially in the current climate. Basically for many hotel chains the only way is up, or going bust. Premier could therefore well be a good investment since they seem to be well capitalised and offer decent value. I think BofE ought just to follow his instincts but I do not think I will be following him!

Dod

[dealtn]

I think it is a bit hard on B0fE to expect him or anyone else to be very specific on evidence for every move. It is not difficult to see that Premier Inns could be a beneficiary of staycations, especially in the current climate. Basically for many hotel chains the only way is up, or going bust. Premier could therefore well be a good investment since they seem to be well capitalised and offer decent value. I think BofE ought just to follow his instincts but I do not think I will be following him!

Dod

Fair enough, but this is Share Ideas, a place to put forward potential investment ideas, and explain why. Get a debate going and tease out where there appear to be opportunities that perhaps haven't (yet) been spotted by the wider investment community.

That's precisely the kind of work we can all do, particularly with the less well known shares.

So if Premier Inn is such an opportunity let's hear about it, and why Whitbread the parent might be a good investment.

I don't think that is being harsh at all. Is there substance or just gut feel to this? The OP says he uses them a lot, so has this happened post-pandemic, and the sell off that he believes to make them attractive? If not that might not augur well for the argument in favour. If yes, what are the differences? Is it more expensive, have the likely costs of running the business gone up? etc.

Now if he isn't able to comment, or be prepared to, then it is little more than naming a share and suggesting others go do their own research. That's is fine but not really worthy of a share idea, in my opinion, and less likely to attract others to a constructive discussion on the investment merits.

Like you I haven't seen anything here to convince me of wider examination and I wouldn't be joining him.

[dealtn]

Found this.

https://www.bbc.co.uk/news/business-53570111

It's not particularly specific, but the suggestion is the most demand is for self-catering or self-isolating types of accommodation. Can you expand on your business case for why Whitbread is a good investment proposition please?

Not by much. Just looking at what they provide relative to what I believe could be lasting trends. Pretty much the same way as I did for RB around the beginning of the pandemic. I do use Premier Inns a lot myself, especially on golfing trips, and have always been impressed with the value they offer. So chuck in a bit of gut feel I guess.

BoE

You look like you are a customer, unlike myself who would at best be described as an infrequent user. My experience is mainly overnight stays, often with the family on a City "short break". The "product" to me is basic, but bearable (but I might be a snob!), and mid-price. It can be cheap, but I suspect the pricing model is one of fluctuating with demand.

I haven't stayed at one for many months, so have no experience post lockdown, and the re-opening. I see that most hotels should be open now according to the 7th July Trading Update.

https://www.investegate.co.uk/whitbread ... 00051805S/

The same applies to the smaller German operation where interestingly they were refurbishing and rebranding during the lockdown. (Too early to know the outcome from a business perspective - unless anyone knows differently?).

You say you are a holder already, so a couple of questions. If you didn't hold already would you be buying, and why? The company has been somewhat transformed by the Costa disposal, so did you buy before that, and did you adjust your views, and holding on the back of that step change, and why? The company had a Balance Sheet "repair" Rights Issue recently, did you participate and if so why?

I don't have enough time to conduct a proper under the hood type research at the moment, but if you, or anyone else, can convince me of a business case on what I might expect to find, and receives as a return for an investment here it would be a useful start point, and the company would at least go on the "watchlist".

To date though it appears to be too much "gut feel", and frankly a company that offers its customers good value, don't automatically attract me as one that can offer me as an investor good value. It's not easy spreading that value to both parties.

[bungeejumper]

To date though it appears to be too much "gut feel", and frankly a company that offers its customers good value, don't automatically attract me as one that can offer me as an investor good value. It's not easy spreading that value to both parties.

We've had this discussion between ourselves on another forum , but I can't agree with you that we should always wait for detailed "factual" evidence at a time when the balance of probability is being determined by bigger macro factors that are beyond everyone's control. And when the short-term available data is really pretty scrambled.

Not least, in this instance, by the fact that hotels and caterers are opening one month, partially closing the next month, partially reopening the month after that, and so forth. The on/off lockdown is currently playing merry hell with the weekly/monthly statistics. And in this situation it seems perfectly acceptable for an investor to take a top-down view of the situation, pick up a lucky charm and throw the dice, in the full recognition that it might go wrong. That may not be everybody's favourite style, but it's worked pretty well for me over the years.

I've done quite nicely out of Premier Foods recently (https://markets.ft.com/data/equities/te ... ?s=PFD:LSE), where a nation in lockdown has been buying Mr Kipling and so forth in large quantities. It might have gone the other way, of course, but that was a macro gamble that I decided to take at the time. My Fidelity China Special Situations hasn't been too shabby either (up 31% YTD), but that's my styl,e and it wouldn't suit everyone, I guess.

Would I buy Whitbread right now? It'd have to be cheap, but in principle I'd consider it. The last time I looked, the company had only partially opened its hotel capability because of what lockdown was doing to it, and we shouldn't ignore the possibility that a second wave of Covid could it shut it down again. Conversely, of course, the government may decide to book Premier Inns solid till Christmas with incoming isolation cases from the airports.

Either way, I'd be looking at it top-down and deciding what the chances were before I even started on the company's financial specifics. Gut feel isn't always such a bad place to begin things. You pays your money, etcetera.

BJ

[dealtn]

Either way, I'd be looking at it top-down and deciding what the chances were before I even started on the company's financial specifics. Gut feel isn't always such a bad place to begin things. You pays your money, etcetera.

BJ

I've got no problem with gut feel, and don't want to wait, or feel the need to wait until its in the numbers. It's usually too late by then.

As you say with Premier Foods you can anticipate ahead of time. I have done a similar thing with shares such as FDEV (increase in gaming in lockdown) and G4M (anecdotal claims of increased musical instruments in the post from the parcel office - same with gym equipment apparently). But for me where I am not seeing it myself it can be useful to hear it from others. In your example a booked out Prem Inn on a Government contract might demonstrate nice turnover, but is that also profitable? I don't know, so if someone who stays frequently, or works there can comment on the cost side that is useful. If staff now have to spend twice as long cleaning, for instance, know that dining means only half the tables being used, etc. this is all interesting information on which to add to a "gut feel". As you say it's a good place to begin...

I'm not sure we have discussed this elsewhere as I'm not a participant on any other site with one exception and I don't think it could have been there.

[Bubblesofearth]

You say you are a holder already, so a couple of questions. If you didn't hold already would you be buying, and why? The company has been somewhat transformed by the Costa disposal, so did you buy before that, and did you adjust your views, and holding on the back of that step change, and why? The company had a Balance Sheet "repair" Rights Issue recently, did you participate and if so why?

Yes, if I didn't hold whitbread already I would buy, for the reasons already given. But it's a much more difficult decision for me to add to a holding. For starters I would probably need to sell something else. Yes, participated in rights.

I don't have enough time to conduct a proper under the hood type research at the moment, but if you, or anyone else, can convince me of a business case on what I might expect to find, and receives as a return for an investment here it would be a useful start point, and the company would at least go on the "watchlist".

To date though it appears to be too much "gut feel", and frankly a company that offers its customers good value, don't automatically attract me as one that can offer me as an investor good value. It's not easy spreading that value to both parties.

I see no point in me carrying out detailed research on the companies financials etc. An army of city analysts will already be doing this and all that information will be in the price. So I adopt a more 'one up on Wall Street' approach and look for a combination of personal experience of quality and my feeling about trends. Both are IMO positive for Whitbread.

I would also point out something that you have also mentioned several times elsewhere and that is that it is important to look beyond cv19. A year is not long in the stock market. Any company that survives intact should be able to at least rebuild to where they were before the pandemic. My gut feeling is Whitbread will do better than this and the halving in their share price is therefore overdone.

Not much I can add except to say it is a share I shall watch closely and might add to my position. If I do buy more I shall report that on this thread in case anyone is interested.


BoE

[scrumpyjack]

I agree. I have held WTB for many years multiplying my original investment many times and having sold a small portion that more than covered the original cost of the entire holding. The analysts will be pouring over their accounts to arrive at estimates for the next couple of years and the current share price will in all probability reflect those estimates. There is no point in the private investor trying to do their own profit forecast!

The far more important issue is what will happen to WTB on a 5 or 10 year view. IMO Whitbread has always been a conservatively run business with the focus on the long term, not on massaging this or next year’s results. Looking beyond the next couple of years I think they will be a solid investment and I am happy to keep them in my portfolio. If that solid trading success emerges, the shares could get rerated significantly, but I don’t expect a repeat of the Costa story, where they bought that business for £19 million, built it up and sold it off for £4,000 million!