Whitbread clubs fail to shape up

TOUGH competition slowed growth at Whitbread's David Lloyd Leisure health clubs in the first 24 weeks of its financial year.

Shares in the group were down 10p to 806 1/2p today as the market digested a trading statement that fell slightly short of Whitbread's own expectations.

Group like-for-like sales were up by 3.1% in the period, with lower-than-expected sales from the leisure unit offset by a stronger performance from budget hotels division Travel Inn and an upturn at Marriott, its four-star hotels business.

Lower retention of members at 'a handful' of health clubs in Greater London meant annual like-for-like sales growth fell to 4.1% from 5.2% at the end of the last full financial year.

Travel Inn saw a 6.3% improvement in sales ahead of its integration with the Premier Lodge chain, which was acquired for £505m in July.

Whitbread acquired Premier's 132 hotels and a further nine proposed sites in July from ased Spirit Group. The enlarged operation, to be named Premier Travel Inn, is the biggest budget hotel business in the UK with 29,141 rooms in 461 locations.

Chief executive Alan Parker said the acquisition of Premier would lead to budget hotels accounting for a higher proportion of group operating profits.

'The integration of the two brands is going well and I can confirm that the year to date performance of the business that we acquired is meeting our expectations,' he said.

Pub restaurant sales were weaker because of a refurbishment programme at the Beefeater chain. The company's High Street restaurants put in a more stable performance.