Welcome to today's Whitbread interim results Q&A session. My name is Jordan, and I'll be coordinating your call today. If you'd like to register a question, you may do so by pressing star followed by one on your telephone keypad. I'm now gonna hand over to Alison Brittain, CEO, to begin. Alison, please go ahead. Good morning, everybody, and thanks for dialing in to our interim results Q&A session. I hope you've had the opportunity of listening to the presentation and seeing the slides already this morning because they went up around 7:00 A.M. Just to give you one or two points of the highlights, and then we will just plow straight into the Q&A because we know that you would like to focus on the things that are important to you. Just a couple of highlights. First of all, Premier Inn's recovery in H1 was very strong and ahead of expectations, and we saw a significant market outperformance in the U.K. Then in Germany, our expansion plan is continuing at pace. The open and committed pipeline now stands at 73 hotels, and we have 31 hotels currently open and trading. Obviously have just been refurbished and rebranded as Premier Inn for quite a number of our acquisitions and now we're trading. In terms of outlook, the sales recovery is ahead of expectations, but we are cognizant of the number of uncertainties remaining. We're confident that the like-for-like RevPAR run rate in the U.K. have now the potential to reach full recovery at some point in 2022. Many of you will recall that in April, at the full year results, we were talking about that being a year later in 2023. That's looking much more positive on point. While we are confident on the return to pre-pandemic profit margins, we're still assessing and waiting to see a little bit on visibility of long-term inflation and supply chain and just seeing what of that shakes out to be structural and what of it shakes out to be temporary. If you look at the longer term rather than the short term, when we look at the longer term, in the U.K., we are gonna continue to grow. We've got very great, powerful competitive advantages in our scale, our brand, direct distribution, and a brilliant operating model and very broad customer reach. We do think we've got an opportunity to grow at least a third again, in our size in the U.K., as well as optimizing the network and making additional gains through things like a Premier Plus investment. In Germany, we are expanding at pace. We will continue to look at both organic and inorganic growth and building the brand proposition. As we've now got 30 hotels across a range of major cities, we are able to now start national brand building, which obviously will consolidate the position in Germany as a leading player. We think we are well placed to take advantage of the accelerated supply contraction in both our markets of the U.K. and Germany, in a time when I suspect there will be really constrained investment amongst both the independent and budget funded operators in those markets. That was all I was going to say as a starter for 10. Let's go back to Jordan and see if you can open the line for Q&A, please. As a reminder, if you'd like to register a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. Please ensure you're unmuted when speaking. Our first question comes from Bilal Aziz of UBS. Bilal, please go ahead. Good morning. Good morning, everyone. Thank you for taking my question. Just the first three for me, please. The first one just on the cost outlook, please. Appreciate it's too early to guide into next year, but perhaps can you talk a bit about your pricing strategy now? Clearly at the start it was very much about pricing for occupancy, but what sort of confidence do you have in driving ADR as a budget operator, if these cost pressures are structural? Secondly, I guess tied to that, you've announced about GBP 40 million of now cost increase with a mixture of marketing and refurbishment. A, is that now a structural cost increase going forward? How should we think about the GBP 20 million COVID secure costs also you have right now going forward? Very lastly, just on competitive supply, it was referenced quite a fair bit more today. How much do you think has come out now since the summer? Relative to the GFC, your best guess right now on how this is likely to play out in numbers terms, if you can? Thank you. Hi. Yeah, thank you for that. Let me take the first question. I'll give Nicholas the second question, and then we may come back and do a double act on the third question, maybe. The first one was around pricing strategies. We've got a centralized model, commercial model, which actually in times like this, when it's particularly uncertain and where you're managing, you know, some degree of volatility, it's incredibly helpful to have that engine that works for us. It's incredibly helpful to be able to set prices across individual hotels in individual circumstances and be able to sort of monitor and manage very closely what's happening with supply and demand and what's happening with pricing and fill. You're right that at the beginning we started looking at an occupancy-led strategy, but we didn't apply that occupancy-led strategy across the entire estate. We very much pulled levers where we had levers. For example, in places of low demand, and they were largely at the beginning of coming out of lockdown, the metropolitan areas, then we set lower pricing until we filled, and then as we filled, the prices rose. That meant that we were able to manage a higher level of occupancy in the market. Where we were aware that we would have strong demand or we predicted strong demand, then we were able to play a pricing-led strategy, which was about taking rate. We knew that ultimately, the hotels would fill behind that rate. We then were able to outperform on average room rate and RevPAR in from a rate perspective. We're very well able to tune our strategies for local circumstances and local pockets of demand and, you know, our assessment of what we expect going forward and also our read on forward bookings. Forward bookings remain short-termist. You know, much less long booking than we were used to pre-pandemic. But we have started to see that recover, and we can see now bookings into the Easter period next year and the summer of next year, et cetera. We can see, we get a read on what we think demand will look like, and we think that that's gonna be pretty healthy in the leisure market, still very good in the trades market. We're seeing early signs of good recovery in the white collar market. Really, it's only the international traveler market, which we're not expecting to see much of a recovery there until into next year. Quite a small percentage of our business, as you know. We're pretty positive about how, you know, our look forward. We're pretty positive about recovery, and we are positive about being able to use rate as well as an occupancy-led strategy as we move forward. Yeah, on the cost side, you're right. We're very confident about getting back to our pre-pandemic margins. We're just a little bit more circumspect about the timing of getting there, and that's just 'cause there's so much movement on supply chain and inflation at the moment. We wanna just see where that kinda goes to. You know, some of the big cost increases we're seeing at the moment, we've already flagged at the beginning of October. We were public about the wage increases we are seeing in the marketplace and the fact that we've reacted to those, and actually was ahead of everyone else and put our site wages up overall by about 5%, which is about GBP 13 million for this year. That was for five months of the year. That would flow through to about kind of GBP 32 million into next year, overall. We'll keep very close to it. You know, we'll watch it very carefully. We saw there was a kind of a leak yesterday about what the national minimum wage was as well, but we'll you know, make sure that we retain our competitiveness through that as well. There's some costs we've put into the business, which has helped drive our outperformance. You know, we've been trying, you know, in the last kind of six, seven weeks, we've been 14% ahead of the market, and over July and August, we were 13% ahead of the market. That's really been driven by two things. One is I think just kind of the state of our estate is better than people, and people are really looking for that quality at the moment. We've put an additional GBP 10 million into refurbishment. What that does is it takes us to the kind of pre-pandemic spend, and that's where we'll continue to kind of run that overall. The second thing has been marketing, which we put in right at the beginning of the year. We put in GBP 20 million, and we've just announced another GBP 10 million worth of marketing. That seems to really be coming through, and that's both above the line, digital, and also to new channels, so the TMCs as well. I think that's really helping driving our own performance. Your question was, is it structural? Well, it'll be structural if it keeps delivering the overperformance in the marketplace. But obviously, if it isn't, then we'll have to kind of readjust from that point there. We feel very positive in terms of that. It's been really helping us, and it will continue to drive that kind of momentum going forward. You asked about the kind of COVID secure costs, which we announced in April. They are, hopefully, a one-off. When COVID subsides, those will come out of the business overall. You know, we've got kind of cost inflation, you know, in the marketplace. It's all kind of pretty well publicized overall. I don't think it's new news. I just think that if you kind of stand back and think, it comes linking to your last question. Just, we've got an efficiency program in place which really we're driving because we are of scale. We've got the ability across our scale to drive technology efficiencies, process efficiencies overall. If you're in the independent market, you just don't have that to lean on overall. Do you wanna touch on the independents or? Yeah, I mean, it's worth saying we normally do every couple of years a very big network planning exercise, which we've talked to many of you about before, where we look at the structure of the whole market, and we interrogate the level of independence and the decline of independence. You can't do that other than really you sort of systematically going through the phone book and ringing, finding out which hotels are still open and trading and which aren't, and screen scraping and managing through a whole variety of tools. It is quite a big exercise, but it really helps us determine where the local supply and demand features will help us pick where we want to book hotels, and also where we've got white space, where we've got no hotels but strong demand and no competition, and also therefore determines what the runway for growth looks like. We're not ready to do another exercise of that magnitude until the market has settled a bit further because it will be a waste of effort if we do it too early, and we get the wrong read from it. We will do that at some point during next year. However, you know, on the basis that anecdotally we were hearing about people dropping out of the market and seeing some trends which suggested to us that we were seeing already a contraction in supply and a decline in the independent market. We did do a bit of work over the last couple of months where we took a sample of catchments from across the country and looked at the network planning in those particular catchments. Across those catchments that we've looked at, we've seen quite a significant reduction in independent hotel supply, where we think independents have exited or independents have moved to branded. We've looked at where branded have gone to independent as well and where new independents have opened. We've looked at the whole gamut. Across that, we've seen quite a chunky reduction in the independent hotel supply, and quite a decline, which, if you extrapolated across the U.K., would bear out our case that the independent supply will come out of the market promptly post this dislocation, and that will leave a gap for Premier Inn to have both further growth in rate and occupancy in its existing estate and also further runway for growth in the U.K. thereafter. If you recall back to conversations we've had in the past around what happened after the dislocation in 2008 and 2009, we saw a doubling of the dropout of the independent sector at that stage from about 1% to over 2%. The initial study that we've done, but I caveat it by being quite a small sample of the U.K., would indicate that the numbers will be larger this time. Brilliant. That's very clear. Okay. Thank you. Absolutely. Thank you very much. Our next question comes from Vicki Stern of Barclays. Vicki, please go ahead. Morning, Vicki. Good morning. Just firstly on pricing, just to follow up, what your comments earlier were helpful in terms of the strategy and how you're sort of working through price. Just stepping back, the sustainability of the sort of very strong pricing levels that we've seen across the market, especially just in the context of the VAT rise back to 12.5% a few weeks back and 20% next year, if you could just sort of frame how we should think about that with VAT captured too. Secondly, again, sort of circling back on the additional marketing and refurb spend, if I could just sort of press you for more granularity on how we think about the return or the RevPAR uplift on that. I guess every 1 point of RevPAR is GBP 16.5 million. So I guess you're sort of thinking the return is worth more than one point of RevPAR. Yeah, just sort of color around that and I suppose any comfort that there wouldn't be further increases as we look into next year, again, if that opportunity to sort of take advantage is even greater. Just finally on Germany, you referenced in the presentation obviously a slightly slower recovery there than the U.K. Just if you could update on your latest thinking in light of that as to when you'd expect that market to break even. Thanks. Okay. I mean, on price, I think we're quite confident at the moment that we will see, in, you know, increases in prices across the market, and that we will be in a very strong position within the market. That, I mean, I guess that's about as comforting a statement as we can make at this stage. Partly that's why we are confident about the return to pre-pandemic RevPAR levels, both from an occupancy perspective and a rate perspective, and both of those playing through into next year. We are still expecting to have strong leisure demand into next year and strong staycation demand, and strong trade demand and essential worker demand as we go into next year. There's very few pockets of our business where we're expecting constraint, only about 10% of our business is international travel, for example. We are expecting that to be the last part of the market to be restored. Nicholas, do you want to pick up the refurb? Yeah, just marketing and refurb. The marketing is, you know, for a brand like ours, we do think we need to be upfront in terms of in the kind of public eye on marketing. It's interesting, a lot of our marketing is actually it's kind of aimed both to leisure, but it's also aimed at the B2B, typically the kind of SME, the small market as well, where we think over the longer term, actually, we think there's a good market share for us to grow in particular. That's why kind of the marketing spend is split, you know, above the line, which is both business and leisure, the TMCs, but also the new channels as well, and digital as well. It is across those markets. Overall, the refurb spend, as you said, has got us back to pre-level. That kind of gets us back to making sure that we're taking the kind of quality of our estate. You know, we're confident we'll get back to our pre-pandemic margins is what I'll say again, Vicki, overall. That's because we think we've partly got the efficiency program to kind of take this, cut it down, but we do think the spend will drive market share gains, which will kind of offset the kind of cost increases overall, which we know at this time will put that kind of squeeze on the independent market and all the kind of other competitors overall. We do think it'll be good return and get us back to our margins overall. In terms of Germany, I mean, what we've said before is that we think the pandemic has had probably a bigger impact in Germany with a slower recovery. We were 47% occupancy over the summer, and that's risen to 60% in August and about 62% in the last seven weeks. You can see it's about 15%-20% behind where the U.K. is currently, but moving in the right direction. For a brand that isn't really known, we're pretty pleased with the direction that is going. Just remember, we went into this pandemic. I think we had three hotels open in March 2020. To kind of get to kind of 62% occupancy, which is where the market is, if not a little bit ahead, we think we're pretty pleased overall. We're looking to kind of get to kind of break even once we hit kind of 2024, which is probably where we would do. That will depend if there are things to buy that we have to close and refurbish in that year, which kind of is a cost. That would be kind of a like for like business. Yeah. I think, you know, we've got to think about Germany in a slightly different way and encourage people to think about it in a slightly different way, because the answer to that question, Vicki, you know, is dependent on growth. It takes around, you know, three to four years, more like four, for a hotel to mature in full in Germany. You know, the difference between Germany and the U.K., Germany slightly longer to mature, is really about brand presence. We've only, you know, had a few hotels pre-pandemic. Then although we've grown the estate very strongly in the last 12 months, that's been largely through acquisition, where we've then closed and refurbished. The 30 hotels that we now have to trade essentially just really start from now trading and brand building. We've given that a site takes four years to mature. You know, we monitor, as you'd imagine, every site all the time to make sure they're staying on their maturity curve and that we can see that they're improving. But the more we grow, the more we put a negative into the system, either of hotels that are early in their cycle or, as Nicholas said, through an acquisition where we've closed and refurbished hotels. That obviously changes it. We really need to start thinking about this in terms of, how are the open and trading hotels, performing and are they, you know, what's their contribution level and is that contribution therefore, at the right level and the right maturity level, that's in line with our guidance. Then what is the cost of growth and looking at those two things separately. We've already invested and committed to quite a lot of capital. We're confident from what we can see in terms of what's happening in each of the hotels that we have, that we will be able to be on the maturity profile that we're expecting and that we can deliver mature returns of 10%-14%, on the capital expended, both the current committed spent capital and that going forwards. That is a material value creation opportunity. I would also argue that the 30 hotels we have today, albeit they haven't started trading in earnest yet, but they are now ready to go and they look very good. If you're visiting Germany, you'll enjoy staying in a Premier Inn in any of those 30 hotels. They're beautifully refurbished, and they're great brand ambassadors for us in major cities. That platform itself, which is now a you know a scaled platform, is quite valuable in and of itself, even though it hasn't actually started. We haven't been able to demonstrate that because the trading really commences now. Sorry, that was quite a long answer on Germany, but I just wanted to make a couple of extra points. Thank you. I just had a quick follow-up. I suppose stepping back to when you first entered Germany, I suppose the market, the setup of the market is a bit more sort of business, trade fair skew. Has anything about how you look at that market opportunity post-COVID with sort of, you know, business travel headwinds being more pronounced perhaps than leisure, sort of changed at all? You're right. There have been some changes, and we don't yet know whether any of those are structural or temporary, and particularly things like trade fairs and, you know, whether there'll be a different move and mood. However, if you do go back to the basics of the market that we talked about, the market is 1/3 larger than the U.K. in total anyway, and it's got an enormous amount of both leisure and business travel in that market. The level of budget branded in the market is very low. The market share is very low. The independent sector, which is very fragmented, is still the dominant part of the market and set to decline. The structural reasons to believe that this is the right market for us are still there. Even with a very strong growth in Germany, we'd still have a relatively low market share compared to what we have, for example, in the U.K. of a large market. We think there's a huge opportunity to go for in Germany and a huge opportunity for growth. We think that the fundamentals haven't changed in that regard. I think also just in terms of, again, the scale of the independent market, as you know, the German government has been fairly generous kind of propping up businesses over the last year. As that winds down, which it is currently, I think that independent market, as it is in the U.K., will come under huge strain again. Very clear. Thanks very much. Thank you. Our next question comes from Jamie Rollo of Morgan Stanley. Jamie, the line is yours. Morning, Jamie. Thanks. Morning, everyone. Thanks. Three questions, please. Just first, you haven't touched much on F&B, which seems to have sort of lagged the market quite a lot clearly due to the slightly different mix of sort of internal and external there. Could you just remind us just of what's sort of going on and when that might get back to sort of where it was? Secondly, I appreciate you can't give us explicit guidance on FY 2023 costs, but what were the group's or what are the group's sort of full year utility costs please? Just to get a feeling for the increase when those hedges come off. The scripted presentation just noted that the GBP 5 billion-GBP 6 billion reval in 2018 was at a 4.5%-5% yield, and that some of the recent sort of secondary transactions are lower than that, suggesting some upside. Are you planning to revalue the property at some point? Or perhaps you can give us a sort of holding figure or range to where you think it might be valued at the moment. Thank you. Thanks, Jamie. Yeah, I mean, yes, on F&B, we all said a huge amount about F&B. Certainly, I think in terms of the return, the bounce in accommodation has been, you know, really very significant for us and slightly less so in F&B. We are in the last few months ahead of 2019 in accommodation. We're still behind 2019 in terms of our F&B. We recovered to a good extent, but we haven't hit yet 2019 recovery. I think probably from a market perspective, we are seeing the pub sector and particularly the value pub sector coming back, being a bit of a laggard in terms of coming back through the market, and that's the sector that we are in. One of the big differences this year versus last year in that sector and for us specifically is the reduction or and indeed I'd go so far as to say removal of discounting. Two years ago, discounting was an enormous part of this market, but in order to protect the margin and to manage the inflationary pressures, the whole sector has reduced discounting, and we've removed it in its entirety. It's not quite the same like for like commercial performance that you can compare and contrast quite as easily as it was. Nonetheless, I think probably we've still got a bit of work to do to see a full recovery in the sector. Yeah, just in terms of the cost question, I think it was specifically on utilities you were asking for, Jamie, and I imagine that's just electricity and kind of gas overall. In the pre-pandemic year, that was around GBP 60 million worth of our costs split between those two. Obviously, electricity much higher than gas overall. Just before you apply the whole inflation to it, you can remember about half of that is transition costs and half of it is actually the commodity prices. On the commodity prices, we're reasonably well hedged. We're about 65% hedged overall into next year overall. I said earlier, we're pretty well hedged this year overall. The last question you had was on property. You're right, in 2018, we did the last valuation. We had yields of kind of 4.5%-5.5%. If you look at, we've had about kind of 20 transactions in the last 18 months in Premier Inn. These are Premier Inn leases that have been sold between leaseholders, freeholders, sorry. Particularly that's picked up in the last kind of six months overall. I think all I'd say is we've seen London come in a little bit tighter than those, but it's only a limited number of sites. It's just kind of a couple of sites, and they've been pretty prime good locations. I wouldn't read that too much across the estate. The rest of the estate, so the ones particularly in the regions and small and large towns, have come pretty much in that kind of 4.5%, kind of 4%-5%, kind of region overall. I think probably the kind of guidance that we'd you know, all I'm saying is that the indications from the recent transactions would kind of support the guidance that we gave in 2008, but there haven't been that many transactions. We'll continue to review. As you know, we keep an open mind to this. I think what we'd like to do is like to see a higher level of transactions right across our estate before we actually consider doing a valuation to make sure that we've got kind of proper kind of evidence points. But we just wanted to share that what the evidence is so far is supportive of that kind of historic rate. What we don't know, Jamie, is if you'd have to give small amounts of rent-free periods which might knock 0.2%, 0.3% off the yields overall, but we just don't know that at the moment. We're pretty confident. I mean, the summary is we're very confident in the range we've previously given. Yeah. Correct. I think being able to at least, Yeah. Yeah. Plus, I guess you spent what? GBP 500 million on freeholds and FF&E since then. Yes, probably about GBP 400 million since 2018 have gone in as well. Actually, we've disposed of some as well, actually. It's probably about half that actually. Thank you very much. I can come back to you on the exact numbers, though. Okay. Our next question comes from James Ainley of Citigroup. James, the line is yours. Morning, James. Great. Thank you very much. Good morning. I've got two questions, please. First is you've upgraded your new opening guidance for this year. I'm interested to get some color about longer term trends. I suppose within that, it'd be interesting to hear about how you're finding competition for new sites, you know, number of competitors, how's that trended sort of as we've kind of exited the pandemic. Also, do you see any risk to those construction timelines, given supply chain issues, getting hold of kit from China perhaps? Secondly, on labor, I'm interested to hear what impact that recent pay raise has had on your application rates and, you know, is that materially helping ease your labor shortage? What might be your planning assumption for next year on wages, please? Okay, good. Well, just in terms of sort of trends on long-term positions, I talked a minute ago about the fact we'd done a small study of supply and independent supply and in order to sort of consolidate our view that we were starting to see independent supply contract. As you know, with that, it's quite hard as there's not a lot of public data. We did. I'll just reiterate, we did a study of seven regional markets and four London markets. Not the biggest study, you know, maybe a sample size of 20,000 rooms. We found that there was quite a high percentage of independent rooms not open. Now, we, you know, you've got to question whether they will open at some point or are they just closed now, or our view would be that you would be open now, 'cause it's been pretty strong trading over the last few months, and if you're going to open, you'd be taking the benefit of that strong trading, and there's no reason to be closed. So we do think that there's going to be that we can already see the early evidence of the contraction in the total market. Obviously, if there's a contraction in the total market, it opens up our trading position in the short term and our growth position in the medium term. In terms of sites, you know, we are still looking at our pipeline. We still have cash on the balance sheet that we can invest, and we are still in the market for filling in the gaps in our network plan. We've got a runway of up to 110,000 rooms from the current 80,000. That's a third again, which we are, you know, committed to fulfilling. We are in, you know, active discussions as we always have been in terms of filling our pipeline, and we're pretty confident about being able to do that over the life of the plan. Just on competition for new sites. We're not seeing any competition from other hotel chains in the U.K. and very little in Germany as well. What you are seeing is the freehold values are staying up quite well. There's quite a lot of cash in the private market at the moment. So it's the freeholds are proving quite challenging to get at the moment, but leaseholds, there's good opportunities for those in the market at the moment. In terms of risk to construction and development, you know, we assess that as we go along all the time, so we're continuously updating our pipeline, so you get a refreshed view every half year of what the pipeline looks like. There might be some delays rather than removals from the pipeline. You're right, you know, refurbishment might take a bit longer because of case goods coming from China, taking a bit longer. Timber supply in the U.K. has been under some strain. I think people have been stockpiling timber. So there'll be sort of pinch points like that, but they're nothing that we can't roll with, you know. A couple of months delay on a five-year pipeline is not really the difference between success and failure. We're pretty confident with that. Then on labor, yeah, we are seeing improvements, both in the, well, the elements of the funnel, so both in the top line application rate. More importantly for us even than that, 'cause we do get a quite high top line application rate anyway, where we're seeing a real positive from the investments that we've made is in the conversion rate to people being in job. When you go through the funnel through, you know, through all the recruitment funnel from interviewing people through, right through to them physically turning up on the day to start the first shift, we're seeing much improved levels of conversion down to people being enrolled. Yeah, we're pleased with the impact that the investment's made. Great. Very good. Thank you. Our next question comes from Jaafar Mestari of Exane BNP. Jaafar, please go ahead. Morning. Hi. Morning, everyone. Morning. Morning Jaafar. Two for me, if that's okay. Hi. The first one's just a point of detail really on your recovery scenarios. One potential headwind for full year 2023 that you were flagging in April was the possibility of a bounce back in overseas holidays next summer, which obviously would be a negative. I think I just heard you say you expected strong staycation demand next year. Is this just, you know, small deltas, or are you seeing permanent changes in how U.K. residents take their holidays and no headwinds because of that? Just more broadly on labor and the second area, as a follow-up to the previous question, could you talk us through that recruitment process, that funnel in the U.K. in a bit more detail? I guess the starting point is you have those 2,000 vacancies. How much of that is churn, how much is activity picking up and then you have to hire for that. How many team members that previously worked for you are you able to reach out to? How do you arbitrage between experienced staff with higher wages but no training, et cetera, please? Okay. Let's just talk about that. I don't know that anyone, although I could get my crystal ball out. As you know, I like to get that out occasionally. I don't think we can really call much about structural and non-structural at the minute. It is quite hard. Genuinely, I think we can call to a couple of things. I think even though airlines are also seeing big bookings increasing, you would see a return. I don't doubt there will be a return to international travel when international travel is allowed and is safe for people. I also think there will still be a strong demand for people to stay in the U.K. If you can forgive me for what that would seem to be contradictory, it sort of isn't really, in that I think that the demand for seeing people going places and traveling short, medium, and long term is all up and the demand for stuff is down. Experiences are definitely something people are feeling the need for. It wouldn't surprise me if we have both a bounce back in international leisure travel and a continued bounce in staycations. Certainly from a forward-booking perspective, where we have a small amount of data, not huge amounts, it is looking strong for that part of the market. That's probably about as much as we can say on it to be fair at this time. In terms of staff, and sort of giving you some insight into labor and how it works. I mean, pre-pandemic, as you know, hospitality has a very high turnover rate. Some hospitality businesses, that turnover rate is more than 100%. So that means, you know, almost their entire workforce turns over, which of course the entire workforce doesn't, but portions of it might turn over every three months. There's a lot of seasonal work and seasonal turnover in terms of, you know, running businesses that have seasonal peaks, particularly as you'd imagine in seaside locations. We have historically at Whitbread had one of the lowest, if not the lowest attrition rates in terms of hospitality. We worked very hard at that over a number of years. We do that through things like having decent pay rates, having pay for progression, which means people can stay in their role and still come away from the minimum wage and get pay rises by achieving certain skill levels and showing that they've got those skill levels through a formal process. We have great training and development programs, and we genuinely have no barriers to entry and genuinely no limits to people's ambition. Because if they've got the ambition, we can train them really up to sort of master's level in our apprenticeship programs, and they can be running, you know, large units like a large hotel at, you know, at quite fast and at quite young ages. We offer all of that. As part of it, we also offer the security of working for Whitbread, which is an organization which has been here for over 275 years and probably going to be here for another 275 years. There's a degree of security about that which is appealing to staff. We already have less churn and less attrition than our competitors. During the pandemic, we kept hold of a lot of our staff. We did the right things in terms of topping up pay when people were on furlough. We gave people shifts, we kept in communication with them. We looked after their physical and mental well-being, and they had a sort of recognition bonus last May as a thank you for having dealt with everything that had gone before. As we went into the summer this year, we put in place a retention bonus for all of our hourly paid workers who were going to be working through the summer and into the autumn, to make sure that we retained our well-trained staff because that is, you know, key to delivering a great service for our guests. That retention bonus stood us in good stead in terms of maintaining our experienced staff base. We have, however, had to recruit and we still have ongoing about 2,000 vacancies at the minute. We always have vacancies. We always have what you might consider to be quite a high number of vacancies because as I say, things move around in hospitality and seasonal changes happen and therefore there are vacancies. Bear in mind, we are a national business with 830 hotels. There, you know, while locationally there are pockets of areas with higher demand, which might end up being London and South East often, because we're national, that vacancy rate is spread over a very large number of units over a very wide geography. Actually it's manageable in terms of being able to open the hotels and operate a service. During the pandemic, one of the changes we made was to move people onto more flexible working contracts. That means that we can flex hours up and down and people can work longer at periods of peak demand and then slow down and work less hours during the lower demand peaks. That helps us also manage the business. That just gives you a sort of sense of the flexibility of the labor model. In terms of the funnel, you know, we take in applications, we recruit people. For some roles we prefer to have experience, but for no roles do we make experience mandatory because we have no barriers to entry, and we can train people with the skills that they need for doing the jobs both immediately and for a career in hospitality and with Whitbread. Hopefully that's a little bit of color on the labor. Thank you. Thank you. That's very helpful. Our next question comes from Richard Clarke of Bernstein. Richard, please go ahead. Hi, Richard. Hi. Hi, good morning. Thanks very much. Just three questions from me if I may. Firstly, the upgrade of the U.K. new room guidance, just wondering where that kind of roughly extra 1,000 rooms is coming from. Is that conversions? Is that some stuff being pulled forward? You know, how have you found the extra 1,000 rooms? Secondly, just looking over it in Germany, appreciate it's just one quarter, but the 73 hotels open and committed is the same as it was at Q1. Are you seeing any sort of slowdown in the organic growth? And maybe just a broader question of the 47,000 rooms, how many of those do you think would be organic versus acquired over that period? Do you need to acquire more to kinda get the hockey stick growth you've talked about in the past there? Then lastly, the government put out a sort of press release last month saying, you know, companies have been returning furlough payments, government support. Are you seeing any political pressure to return any of the support you've received through COVID? Shall I do the first one? Yeah, you go first. Yeah. Just in terms of room guidance, yeah, we've upped to 3,500 before from 2,500-3,000. I mean, all it is, we. What we saw last year is when we slowed the building of our hotels where we could do down just because we just kinda preserved cash. And we've just pressed the button to accelerate that again. What we didn't know is how quickly that would kind of kick back in again. We were quite cautious in terms of, well, in terms of what we thought, in terms of how they would get back on site and with the supply chain issues that would, if that would take longer, than it would do normally. Actually, we've been able to kind of accelerate those kind of back to kinda normal levels at the moment. Maybe even a bit slower than normal, but that's really what. It's just a kind of back switching back on the hotels that we could have built back on again overall. So that's what those are as well. In terms of Germany, 73 hotels, you're right, we were at 73 hotels. I mean, I think they're kind of clear to you. We've gone from kind of three to 73 over the last 18 months. So you're right. From Q2, it's been, I think we've kind of added one and one and one's fallen off actually, is what's actually happened. So it's been a kind of. The focus has really been on getting these hotels open, getting them ready, getting the refurbs ready, and that's been a huge kind of effort for the whole of the team. As I said earlier, we're probably seeing a slowdown in freehold opportunities, and that's where we've really been trying to focus to get some of our freeholds up in Germany, and that has been difficult. There are some good leaseholds kind of coming online, so that isn't kind of a barrier to us at the moment. I think it's just a kind of a temporary pause over the summer, to be quite honest. As Nicholas said, the important thing is we have had the teams massively focused on getting the hotels that we've acquired ready to trade as Premier Inn, and we've probably done that faster than we could possibly have imagined doing it. It's very good planning on behalf of the team as well as an excellent execution. That has been the focus. What, you know, having acquired them, was to get them managed and ready to trade as Premier Inn, properly as Premier Inns, as opposed to having to trade them under their old brands for a period of time. That's what we've asked the team to focus more of their time on, the new acquisition. In terms of other acquisitions in the market there, we, you know, we're pretty confident that over time we will see the same structural decline in the independent sector in Germany, and that will open up either opportunity for single site acquisition or just open up opportunity for new build acquisition because there's a gap in the market. We're also confident that we will see some further acquisition opportunities at the right prices, 'cause as you know, we're keen to make sure that we maintain our discipline in relation to returns on capital. That, you know, we expect that there will be some good opportunities for growth on a non-organic basis. Finally, you asked if we had any political pressure brought to bear on us, and the answer to that is absolutely none. Probably for good reason, and we're in a business of indeed the whole of hospitality, where we were mandated to close our business in the interests of health across the U.K. We did so and managed that position as you would expect. That's the support that was provided by the government was for businesses exactly in our position. Everybody, all parts of our stakeholders gave, you know, support during that period. The government was merely one. The shareholders were another. We worked with suppliers and even our teams, you know, had to work in extremely difficult positions during the period. Across the stakeholder group, the government are one of many who have supported the business. There's been no suggestion, pressure or even question of returning that. What you should also know about Whitbread, though, which is not the same across the whole industry, is that we pay and collect an awful lot of tax in normal times. Again, if you were the government looking at a business that you wanted to support during a period of enforced confinement, we would be it. Because when we bounced back, we bounced back to profitability quickly and we were in the top quartile of taxpayers, of corporate taxpayers in the U.K. in terms of paid and collected taxes. The money will be repaid through the tax roll pretty quickly, but we're not planning on it being repaid any other way. Very clear. Thanks very much. Our next question comes from Alex Brignall of Redburn. Alex, please go ahead. Yeah, morning, guys. Thanks so much for taking the question. Just two, Peter. First one on RevPAR, I guess this is asked a little bit on it. I'm just trying to work out the driving factors behind leisure staying strong. I guess if I look at Germany, their outbound travel was much stronger in the summer, and consequently, their domestic travel was weaker. Obviously, U.K. was weak outbound because there were restrictions. That going up next year seems logically to suggest that domestic travel would be weak. I think it in Q1, you talked about your lack of exposure to leisure markets, meaning that you weren't that exposed to it, but clearly such has been the strength that it's kind of gone into everywhere. I sort of worry that if that leisure travel drops off in those areas, then again, the same impact will be felt across all hotels. Just your broad comments on what you're expecting next year, particularly in the context of, you know, Airbnb claiming that they're going to be taking a lot of staycation demand. And then the second one is on market share gains. You're making a lot of reference to the numbers that I think are driven by RevPAR. But if I look at supply and demand, which demand I think is on your slide, which is the 2.5% number, which has dropped from 7.5% in March. That's obviously the market share gains have been decelerating quite quickly in the last few months, even Q3 on H1. I'm sort of wondering where you think that will level out. If I look at STR supply numbers in your Q2, supply growth was about 3%, for STR in the regions, it was also 3%. Overall U.K. hotel demand supply accelerated to 2% from 1% a few months ago. Supply is now coming back and I guess that tallies with the reduction in your market share gains. I'm just trying to work out where you think that levels out. Thank you so much. Right. Okay. We've got some complicated questions in there, just in terms of. Do you want me to have a go? Shall I start with the last one? Let's start with the last one. Yeah. Yeah. You're right. If you look at March and April when the market was pretty closed, our market share gain was about 7%, and that's 'cause we were faster at reopening. We always kind of said that we were the fastest in the reopening. Since then, it's kind of fluctuated between 3% and 4.5%, depending on business and leisure mix that's kind of gone through. That's where that's been. I wouldn't call it necessarily a slowdown. I'd just say March and April were just incredibly good 'cause we were so fast in opening overall. You know, we haven't kind of given an indication of where we think it would be. Our market share has been up at a peak at about 11%. It's hovering around 10. We went into this pandemic with about 7%. What we said is we said we'd never expect to kind of hold it up at the 10% over the period of time because our competitors will, you know, they will try and open their hotels up again. As you get inbound travel coming back in again, which is only about 10% of our sales, they'll get a bigger share of it. I think you'll see kind of volatility in that. What I think we won't do is we won't definitely go back down to the 7% and we will continue to get good market shares from pre-pandemic levels overall. In terms of the supply coming into the market, I mean, we've seen hardly any supply coming into the market except for us, over the last kind of six months. You've had a bit from some of our nearest and dearest competitors that already had spades in the ground. We're not seeing many new signings kind of coming up overall. I'd refer back to the independents. Yeah. Well, even on that, though, remember how this worked, you know, technically how this worked. Say for us, why have we got so many rooms this year? We held back, you know, so we cut costs last year and held back finishing sites last year because we were in a period of very great uncertainty in the initial lockdown. We obviously battened down the hatches on some of the costs and brought down refurbishments. Then this year we've opened up for that again. We have been finishing sites that have been started. You see 3,500 rooms and we restarted our refurbishment program in earnest as well. What you will find and certainly what you saw in following the recession in 2008 and 2009 is people have to finish what they started. There's not really a choice but to get something back, even if the return profile of what you put into the market at that point is going to be much lower than when you commissioned it, because it takes three or four years to actually get the land, do the planning permission and put the spades in the ground, build and top out the hotel. That's either a developer that's doing that for you as a brand or it's you doing it from freehold, if you're us particularly. Those things do get finished and they do come onto the market and we can see those because you know what's got planning permission, you know what's being built and you know what therefore is gonna come. What you get is not a lot of new commissioning this sort of period. In two years' time, you get a real loss of all supply coming into the market because nobody's started anything, nobody's commissioned anything. We, well, as we said earlier, we can see that because again, you know, we aren't seeing other people bidding for sites against us, for example, in the hotel market. We might be bidding for other use, but not hotel use. We can see that supply will get constrained as we go forward. On top of that, what we can already see is the decline of the independent sector is going to speed up. On that sort of area, the supply will contract. Even if, you know, staycation demand stays year on year the same, or if it's sort of marginally down because it was so big, it was so enormous last year, there'll also be a reduced supply in the market that can take that demand. Therefore, we are expecting to see a strong domestic travel position next year. I think in 2009, what you saw was very little. The independents held on for about 18 months, and you saw people keep on building hotels throughout two years because they contracted. It wasn't until kind of 2011, 2012 probably, that you really saw the pain coming through. The difference this time is it's a small sample, as Alison referred to. If you're seeing the independents coming out at those peak kind of levels that they came to back in the financial crisis. You know, if they're coming out at kind of 2%-2.5%, that's double what they were coming out at in a normal year. We're already seeing that. I think we're also seeing some of those kind of branded players who may have even signed contracts trying to get out of them. We've had some of them come our way as well. I think it'll be kind of similar to 2008, 2009, but kind of exaggerated. Thanks so much. If I could just ask a follow-on one, just on that. I guess, do you know what's happening to the independents? Because the OTAs that obviously sell to the independents always talk about them closing when things are bad, but then they change hands at lower prices and come back as hotels. So it kind of goes back to fear of that supply just comes back. On ultimate supply, do you sort of give any value to, you know, the level of growth that Airbnb has seen and the other OTAs talking about vacation rental taking a huge step forward? I guess I'm just trying to work out other places that demand can go. Yeah. Just on that, the prior point you made. Yes. I mean, sometimes they come back, but we didn't see that on balance they'd ever come back really, in that we've had a 1% reduction in independents, you know, for the last 15 years. Post the 2008-2009 recession, that went up. That doubled to 2% reduction. They don't really come back in that there is an ongoing reduction in that part of the market, which is a structural decline. It's the area of structural growth for us. We're expecting that decline to go faster, not slower, structurally, as we're moving forward from here. Yeah. They might say it comes back, but overall it drops 1% a year. You can see that evidenced, you know, year after year after year. That's one thing. On Airbnb, we look at Airbnb, and you probably know as part of our network model that we do, which is a proprietary model. We deliver every couple of years, and we do an update intra-year. We look at how much demand we think Airbnb will take out of the market. When we are looking at our own runway for growth, which we've no reason to suppose is gonna be less than the runway that we've previously talked about, which is 110,000 rooms. We have taken into account what we think Airbnb will do within the market and how much supply they can bring out of the market. We do model that part of our own work to make sure that we're not misleading ourselves into thinking that there are growth opportunities that aren't there. Okay, fantastic. Thank you so much. Really appreciate it. Thank you. Our following question comes from Tim Barrett of Numis. Tim, the line is yours. Tim, morning. Hi. Morning, both of you. I'll keep it brief. A couple of questions on the seven-week period. 81% occupancy feels very strong, given that you've still got a depressed London market. Could you give us a rough split, even if you don't wanna give specific numbers? Last seven weeks in food and beverage up 11%. Maybe naively, I've always tended to think of that as correlated with occupancy. That's telling us that third-party sales are down quite materially. I just wondered how you're planning to win that back, and what you're gonna do with pricing, now that VAT has gone up somewhat. Thanks very much. Just the London. This is the last seven weeks of the year that we said. The last seven weeks, sorry, not the last seven weeks of the year. The last seven weeks that we said that sales, accommodation sales were up about 7.9%, and strong occupancy as well. We've seen occupancy in the regions about up above 80% and London in the kind of mid-70s overall. Still both pretty strong. You've seen of that mix, you've seen the regions up around about kind of 18%, 19% total sales and London down by about 20% overall. London you can see is still a bit softer, but coming back. On the F&B, I mean, we're very strong in breakfast, as you would imagine, for our F&B activity and for the pub restaurants that we have. Less so for dinner. I think it from memory, and I don't have the numbers in front of me, Tim, but my memory is something like 25% sleeper/diner ratio for dinner. It's more like 50% for breakfast. Then obviously no lunch whatsoever that we do from hotel guests. That's kind of a zero. Thank you. In terms of the proportions of people who stay with you, who dine with you, that's how that works out. Really dinner for F&B profitability, dinner's the one. You can tell that actually quite a lot of our dinner activity does rely on local consumption, local market participation. It's not all a question of the people staying with you in the hotel. That's been the case. I mean, these numbers haven't changed post-pandemic. Particularly they've been pretty much the same. There has been a difference in discounting. As we said, we haven't discounted at all, whereas we were always running discounts of 50% off mains or 30% off mains. To some extent, margin has held up. You know, to be honest, I think most operators are expecting to see prices pass through because with the inflationary pressure plus the VAT change, it's not really possible to absorb all of that. I expect overall that there is a sort of rising cost of eating out that you're seeing. The value pub sector that you can therefore tell why the value pub sector finds that the most difficult place because you know the other end of the spectrum people have got a lot more appetite, if you pardon the pun, for higher prices, where at the value end it is tougher. We are looking at a range of commercial levers to pull, as you'd imagine, to increase our covers and increase marketing activity, and to manage the menus to get to the best possible trading outcome for F&B. It isn't an easy part of the business to manage at the moment. I'm just conscious of time. I don't know how many. I think we've probably got time for one more. Thanks, both of you. Thank you. Bye, Tim. Our final question comes from Joe Thomas of HSBC. Joe, please go ahead. Hello Joe. Good morning. It is just one because everything else has been answered. I just wanted a bit more visibility, please, or a bit more granularity, I suppose, on business demand, the extent to which your thinking has moved on that, you know, to what extent it might be impaired. Also of course, related to this, any the early impacts of the travel management systems and what being on them has brought to you. Yeah, in terms of where we are, you know, we predicted the leisure bounce and got it probably bouncing even higher than we predicted. With the trade demand actually stayed much more robust through lockdown than we'd anticipated, but it gave us a really good occupancy level that was above our, you know, cost of trading occupancy during the lockdown period. That stayed resilient and robust. We're not concerned about that element at all. Then on office workers, we have seen demand returning. I guess if you look at things like the London numbers, you'll probably be surprised by the occupancy levels in the mid-seventies. You know, clearly in September and October, that's not all leisure travel or weekend leisure travel. That's core business demand in London coming back. We've thought that that is has been encouraging, would be the way I'd describe it. Early encouraging signs have it, albeit that lots of it remains short lead. I mean, business travel is more short lead than leisure anyway, but it's sort of super short lead now. We have been quite thoughtful about, you know, what will happen in the winter. Last year, we had a lot of exuberance in hospitality, and then, we were the cautious ones saying, "We think we'll lock down again in winter." Of course, we did lock down again in winter. We're just cautious about whether or not that demand will dissipate during the winter months or whether it will stay open across the U.K. We've been more heartened by its demand, and that probably was ahead of our expectations as well. In terms of sort of activity, we've done a lot of work during the pandemic on improving our systems and our business booker tools, for example, and that's for the mid-sized players, the small and medium-sized players. We've seen a very large increase in take-up of business booker from those size businesses. Again, that goes to sort of tradesperson demand holding up and some of white-collar holding up. During the period, we've also signed up a lot of travel management companies. We did a lot of work with travel management companies, which, as you know, is demand we can't receive from anywhere else. I don't think that's come to fruition yet, in that, until white collar demand comes back in more earnest, then that travel management company business won't kick in. When it does, we've laid the groundwork for us to be able to participate in that market in quite a strong level. We're still waiting to see the fruits of that work, but I think it will come through, and if it's not this year, it'll be next year to give us a boost. Thank you, Joe. Fine. Thank you very much. Thank you. Great. Well, that concludes the session today. Please reach out if there's anything we haven't covered that you'd like t o know about on one to one. We're around and the team's around to take calls. Wishing you all the very best of a good week. Take care. This concludes today's call. Thank you for joining. You may now disconnect your line.