Whitbread : Annual Report and Accounts 2023

Annual Report and Accounts 2023/24

Building

on our

advantage

Premier Inn Swindon Town Centre, our first all-renewable energy hotel

Whitbread owns Premier Inn, the UK's biggest hotel brand, operating over 85,000 rooms in over 850 hotels. We also have a significant and growing presence in Germany, where we have 59 hotels open and where we are determined to replicate our UK success to become the number one hotel brand.

Our scale and passion for excellence mean we can deliver a great guest experience at an attractive price whilst also continuing to invest in our operations.

Our year at a glance

Statutory revenueAdjusted profit before tax† Statutory profit before tax

£2,960m	£561m	£452m
2022/23 £2,625m	2022/23 £413m	2022/23 £375m
Adjusted basic earnings	Statutory basic earnings	Dividend per share
per share†	per share†	97.0p
206.9p	161.0p
2022/23 162.9p	2022/23 138.4p	2022/23 74.2p	* Total shareholder dividends and share
			buy-backs paid in 2023/24.
Adjusted operating cash flow†	Lease-adjusted net debt to	Total shareholder returns*	† See pages 231 to 237 for definitions of
alternative performance measures. This
	adjusted EBITDAR†		footnote is referenced throughout the report.
£787m	2.9x	£756m	Throughout this report and unless stated
otherwise, all percentage growth
comparisons are made comparing the
latest year (2023/24) performance with
2022/23 £719m	2022/23 2.6x	2022/23 £119m	that of the prior year (2022/23).

Building

on our

advantage

Our sustained programme of investment across all areas of our operations is driving our differentiated and proven business model to deliver attractive levels of return.

Guest proposition	Estate growth
and optimisation	Technology
See page 12	See page 24	See page 38

Teams	A Force for Good	Governance
See page 46	See page 56	See page 98

STRATEGIC REPORT G F O		1

Contents	Governance
Strategic report	98	Corporate governance
	at a glance
2	Purpose roadmap	100	Chairman's statement
3	Brands and locations	102	Corporate governance
4	Why invest?		statement
6	Chairman's statement	104	Board leadership and
8	Chief Executive's review		company purpose
12	Strategy in action:	106	Division of responsibilities
	Guest proposition	107	Board of Directors
14	Business model	111	Executive Committee
16	Strategy and KPIs	112	Composition, succession
18	Stakeholder engagement		and evaluation
24	Strategy in action: Estate	114	Nomination Committee report
	growth and optimisation	116	Audit Committee report
26	UK market drivers	122	Remuneration Committee
28	UK strategy		report
30	UK performance	126	Remuneration at a glance
32	German market drivers	128	Directors' remuneration policy
34	German strategy	129	Annual report on remuneration
36	German performance	142	Directors' report
38	Strategy in action: Technology	148	Directors' responsibility
40	Long-term growth strategy		statement
	and performance	149	Independent limited
42	Chief Financial		assurance report
	Officer's review	Consolidated accounts
46	Strategy in action: Teams
48	Chief People Officer's review	2023/24
56	Strategy in action: Force	153	Independent auditor's report
	for Good	162	Consolidated income
58	Force for Good: Strategy		statement
60	Force for Good: Materiality	162	Earnings per share
61	Force for Good: Opportunity	163	Consolidated statement of
62	Force for Good: Community		comprehensive income
63	Force for Good: Responsibility	164	Consolidated statement of
64	Risk management		changes in equity
66	Principal risks and uncertainties	165	Consolidated balance sheet
72	Viability statement	166	Consolidated cash flow
73	Non-financial and sustainability		statement
	information statement	167	Notes to the consolidated
74	Climate-related financial		financial statements
	disclosures	Whitbread PLC Company
		accounts 2023/24
		217	Company balance sheet
		218	Company statement
			of changes in equity
		219	Notes to the Company
			financial statements
	Find out more about	Other information
	Force for Good in our
	230	Glossary
	ESG Report 2023/24
	231	Alternative performance
	Find out more online		measures
	238	Shareholder services
	www.whitbread.co.uk/

Whitbread PLC Annual Report and Accounts 2023/24

2 STRATEGIC REPORT

PURPOSE ROADMAP

sets us

Whatapart?

Our purpose

To provide quality, affordable hotel rooms to our guests, to help them to live and work well and to positively impact the world around us.

With no barriers to entry or limits to ambition, we will provide meaningful work, skills and career development opportunities for our teams.

See page 52

Strategic framework

Force for Good

Force for Good is our long-established sustainability programme. Within each aspect of our business strategy are stretching targets that are fully embedded across our business.

Opportunity

Supporting our team members so they can reach their potential with no barriers to entry and no limits to ambition

Community

Making a meaningful contribution to the customers and communities we serve

Responsibility

Always operating in a way that respects people and the planet

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Find out more online

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See page 58

"Our ambition is to be the world's best

F ocus to gr

See pages 16 to 17

Whitbread PLC Annual Report and Accounts 2023/24

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budget hotel brand."

Dominic Paul

Chief Executive

BRANDS AND LOCATIONS

Our brands

Hotels

Premier Inn is the largest hotel brand in the UK and has a growing presence in Germany. Our consistent guest proposition is synonymous with providing high-quality and great value hotel rooms. We have a long runway for growth; with our committed and future pipeline, as well as our extensions programme, we will reach at least 97,000+ open rooms in the UK by 2028/29.

STRATEGIC REPORT G F O 3

Where we operate1

'hub by Premier Inn' offers a more compact, digitally advanced in-room experience at a great price in prime locations. With 17 hub hotels already open across London and Edinburgh, we have a committed pipeline to open more sites over the next few years.

United Kingdom

Our largest and most profitable market is driven by high volumes of domestic travel with additional inbound travel from international markets. With a significant decline in the independent sector and limited new room growth from other branded operators, a favourable supply backdrop is expected to continue for a number of years.

Germany

The German hotel market is 40% larger than the UK and shares a number of attractive structural characteristics that helped drive Premier Inn's success in the UK. Having grown rapidly in recent years, we are on course to become Germany's number one hotel brand, delivering profitable growth and attractive long-term returns on capital.

Food and beverage

Food and beverage, especially a hot breakfast, is a key part of the overall guest

experience at Premier Inn. Our guests have access to either an unbranded integrated

restaurant within the hotel or a branded restaurant just next door.

UK long-term room potential

125,000

Open rooms2

85,000

Committed pipeline4

7,000

Read more on pages 26 to 29

1. As at 29 February 2024.
2. Includes six sites in Ireland, one site in each of Guernsey and the Isle of Man and two sites in Jersey.

Long-term ambition to become

No.1

Open rooms3

10,500

Committed pipeline4

6,000

Read more on pages 32 to 35

1. Includes one site in Austria.
2. Sites where the Group has a legal interest in a property with the intention of opening a hotel in the future.

Whitbread PLC Annual Report and Accounts 2023/24

4 STRATEGIC REPORT

WHY INVEST?

Investment case

Whitbread owns Premier Inn, the UK's largest hotel brand, and is also on course to become the number one hotel brand in Germany. The Group employs over 38,000 people and is a long-term constituent of the FTSE 100 index.

1 | Long-term UK growth opportunity

With over 85,000 rooms open and a further 7,000 rooms in our pipeline, we have significant growth potential of up to 125,000 rooms across the UK and Ireland. The structural shift in UK hotel supply following the pandemic and a subdued pipeline of new build hotels means we do not expect UK supply to recover to 2019 levels until at least 2028. Our in-house acquisition team, large freehold portfolio and flexible approach to property ownership means that we are well-placed to take advantage of this significant market opportunity and can add rooms through new sites and extensions.

2 | Unlocking value in Germany

The opportunity to create substantial value in Germany is significant. With similar characteristics to the UK market, Germany has a large and declining independent sector but, unlike the UK, has no clear leader in the branded budget segment. Following the opening of our first hotel in 2016, we have grown rapidly through a combination of both organic growth and acquisitions. At the end of 2023/24, we had a total of 93 hotels in our open and committed pipeline, making us one of the largest operators in the market. We have committed £1.1bn

of capital and have a clear strategy in place to become the number one hotel brand in Germany and reach long-term returns on capital of between 10-14%.

Open hotels*		Pipeline hotels
59	34	* Includes one hotel in Austria.

3 | Differentiated operating model delivers a market-leading customer proposition

Long-term

potential rooms

Mid-term

rooms

125,000

Open and

target

committed

rooms

97,000+

92,000

Our operating model gives us a significant competitive edge. Ownership of all aspects of our operations ensures the delivery of a consistent, high-quality product, whilst our scale and financial discipline mean we can continue to offer great value for our guests. Our in-house, centralised approach to revenue management integrates digital marketing into our trading strategy, helping us to maximise revenue. Almost all of our bookings are made direct, significantly lowering our acquisition and retention costs.

We are evolving our offer to ensure that we uphold our brand promise and continue to delight our guests. Our food and beverage offer drives incremental RevPAR and our planned changes to optimise our offer will further enhance the guest experience. Our Force for Good sustainability programme ensures we are contributing positively to the communities where we operate.

YouGov BrandIndex1

	40		Hilton			Premier Inn
	30
Quality			Marriott
20		Crowne
			Plaza
			Best	Holiday Inn
	10
		Western	Airbnb
			Ibis	Holiday Inn Express
	0				Travelodge
	10	20	30	40	50

Value

1 YouGov BrandIndex Quality & Value scores as at 29 February 2024 based on a nationally representative 52-week moving average.

Whitbread PLC Annual Report and Accounts 2023/24

4 | Increased returns on a growing capital base

STRATEGIC REPORT G F O 5

5 | Asset-backed balance sheet provides stability and enables growth

Our vertically integrated business model, continued capital discipline and diligent execution of our business strategy have combined to deliver strong growth and attractive rates of return. This year, our UK business reached record levels of returns whilst we continued to grow our estate.

Since 2019/20, we have added almost 7,000 rooms across the UK and Ireland and increased our return on capital employed† (ROCE).

In 2023/24, our UK estate stood at over 85,000 rooms and we achieved ROCE† of 15.5%. We aim to drive this higher through optimisation of our estate, as well as a series of commercial initiatives and operating efficiencies. Whilst still in its early stages of development, we believe that our German business, once mature, will deliver strong growth and attractive long-term returns.

With an upgraded investment grade2 rating of BBB, at the year-end we had net debt† of £298m. We have a strong balance sheet that underpins our confidence in being able to continue to invest, even through periods of macroeconomic uncertainty. Our balance sheet is backed by a substantial freehold property portfolio that provides operational flexibility and is a potential source of future funding through selective sale and leaseback transactions. It also enables us to maximise the commercial opportunity in any location

Premier Inn UK Return on capital

Premier Inn UK returns

Number of UK rooms			Premier Inn UK ROCE†	COVID-19 pandemic
							82k	84k	85k
							15.5%
					13.4%	79k	79k	12.9%
		13.0%
		76k
13.5%	12.9%		68k	72k	13.3%
	65k			11.2%

59k	2.3%

(14.4)%

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

and optimise our portfolio by extending existing sites, closing sub-scale hotels and opening bigger, more efficient hotels, thereby maximising returns.

2 Fitch Ratings, 17 August 2023.

Freehold : Leasehold mix

Open	Freehold	52%
Leasehold	48%

Open and	Freehold	52%
committed	Leasehold	48%

Whitbread PLC Annual Report and Accounts 2023/24

Building6 STRATEGIC REPORT

CHAIRMAN'S STATEMENT

on our opportunity

Adam Crozier

Chairman

The past year has seen us deliver another outstanding financial performance. The execution of our business strategy, supported by our strong market position and differentiated business model, is extending our leadership position in the UK and we are making encouraging progress towards replicating that success in Germany.

Our strong performance ensures we can continue to invest in our existing business, as well as in new opportunities to drive long-term returns for the benefit of our stakeholders.

Our results are underpinned by the continued dedication and hard work of our teams. Their passion and focus on operational excellence ensures that, even at high levels of hotel occupancy, we are continuing to deliver a high-quality and great-value experience for our guests. Sustaining our market-leading customer proposition requires that we continue to evolve our business, balancing the needs of each of our key stakeholders, backed up by a process of rigorous oversight, performance management and our Force for Good sustainability programme. Tailoring the way we provide food and beverage in a number of our UK locations is a further example of this process in action. As set out in the Chief Executive's review, our planned changes to our branded restaurant portfolio will improve the service to our hotel guests, unlock the addition of new high-returning hotel rooms and increase efficiencies. Whilst there will be an impact on some of our team members, we will seek to offer alternative opportunities across the Group wherever possible.

The nature of our business requires that we take a long-term view when it comes to capital allocation. This approach has served us well over the past 280 years and is building on our advantage, opening up new opportunities for future growth and increasing financial returns.

Full-year results and final dividend

Premier Inn UK remained the engine of growth in 2023/24, supported by further progress in Germany and increased interest receivable on our cash balances. Group statutory profit before tax was £452m, an increase of £77m versus the prior year after £109m of adjusting items (including £107m of impairments).

Our vertically integrated business model ensures we have control over the guest experience and provides us with significant operating leverage, generating strong cashflow of £787m over the past year.

As a result, we were able to continue to self-fund our programme of investment, with expansionary and non-expansionary capex totalling £509m in 2023/24. Our balance sheet remains strong, as reflected by the improvement in our investment grade rating to BBB in August 20231.

Given our strong performance and confidence in the outlook, the Board is recommending a final dividend of 62.9 pence per share,

a 26% increase from last year and a further £150m share buy-back. The final dividend will be paid on 5 July 2024 to shareholders on the register on 24 May 2024. As in previous years, the Dividend Reinvestment Plan (DRIP) will enable eligible shareholders to receive their dividend entitlement in the form of additional Whitbread shares.

Find out more online

www.whitbread.co.uk

1 Fitch ratings, 17 August 2023.

Whitbread PLC Annual Report and Accounts 2023/24

STRATEGIC REPORT G F O 7

With our continued commitment to the environment as part of our Force for Good agenda, and in response to a rise in the number of uncashed dividend cheques, we have decided that in future cash dividend payments will only be made by electronic means. This will start with the interim dividend, which we expect to pay in December 2024. From that point on we will no longer be issuing payments by cheque. Further details on how you can register your bank account details, so you can have dividends paid directly to your account, can be found in the shareholder services section of the report on page 238.

Strategy

Our strategy is unchanged and we are continuing to seek ways in which we can refine and improve our business. Examples include the further optimisation of our UK estate, continued progress in Germany, our upgraded technology platform and our new £150m efficiency programme. Further detail on these and our other commercial initiatives is set out in the Chief Executive's review on pages 8 to 11, explaining how they are helping to ensure we continue to deliver a quality experience for our guests, provide rewarding employment for our teams and attractive long-term returns for our shareholders.

Capital allocation

Retaining a strong balance sheet with investment grade metrics remains a key pillar of our capital allocation framework. Having considered carefully the Group's financial performance and overall business outlook, the Board is pleased to be able to announce a further £150m share buy-back, which is in addition to the £600m that was returned over the past year.

Further details regarding the latest share buy-back can be found in the Chief Executive's review on pages 8 to 11

Force for Good

An integral part of our strategy is our sustainability programme, Force for Good. We remain focused on delivering against the three pillars of our programme: opportunity, community and responsibility.

During the year we continued to invest in our teams, not just through increased levels of pay but also through initiatives such as our apprenticeship programme that is helping to provide those at the start of their careers with an opportunity to acquire new skills and build a career with us at Whitbread.

We have made good progress with our operational carbon and water reduction and continue to trial solutions that will further decarbonise our estate. In addition, we have started preparing for the Corporate Sustainability Reporting Directive, including our double materiality assessment.

Our partnership with Great Ormond Street Hospital Children's Charity has now raised a total of over £24m in the UK and during the past year we donated over 50,000 pieces of bedding and 2,000 mattresses to those impacted by the conflict in Ukraine.

You can read more about our Force for Good commitments and progress during the past year on pages 61 to 63

The Board

I am pleased to report that Dominic Paul's arrival as Chief Executive last year has been hugely positive. Dominic's understanding of our business approach has allowed us to progress at pace on a number of key initiatives, whilst continuing to deliver outstanding financial results. Dominic summarises our progress over the past year as well as some of our future plans in his review.

During the year we appointed Shelley Roberts as a non-executive director. Shelley brings a wealth of experience from her current role as Chief Commercial Officer at Compass Group PLC, as well as from her previous

roles in the international airline industry and she is already proving to be a valuable addition to the Board.

Both David Atkins and Fumbi Chima have confirmed that they will not seek re-election at this year's forthcoming AGM. I would like to take this opportunity to thank them on behalf of the Board for the significant contribution that they have both made to our progress and to wish them well for the future. Their decision to step down presents an opportunity to review the size and shape of the Board whilst continuing to make sure that we progress towards our 40% target of female Board members, as recommended by the FTSE Women Leader's review. Although we do not yet have a female appointee in one of the top four senior positions, we are committed to achieving this goal and will provide further updates in future reports.

Governance

Whilst satisfied that our governance approach is robust and effective, we are not complacent and I have welcomed input from a number of our investors with whom I have met during the past year. Hearing first-hand their views on a range of topics including business strategy and culture, remuneration, environmental, social and governance matters as well as financial and operational performance has been most useful in helping to inform how we think about and oversee all areas of our business.

Executive remuneration remains a key area of focus both for the Board and the Remuneration Committee. As explained by the Chair of the Remuneration Committee on pages 122 to 124, our executives and wider teams are incentivised to achieve what the Board believes are stretching targets so that their interests and those of our shareholders and other stakeholders are aligned.

Annual general meeting

The AGM will take place at 2.30pm on Tuesday 18 June 2024 at our head office in Dunstable and full details of the meeting are set out in the Notice of Meeting. For those able to attend, my colleagues and I look forward to welcoming you then.

In the last couple of years we have provided a live video stream of our AGM, together with the opportunity to both vote and ask questions remotely during the course of the meeting. The number of shareholders using this service has been very low and does not justify the cost. We have therefore taken the decision to scale back the online element of the meeting this year, which will be available remotely via an audio-only webcast.

Shareholders who are unable to attend the meeting in person are welcome to submit questions by email in advance of the meeting to [e-mail]. Any questions should be submitted by 5pm on Monday 17 June 2024. Votes can be submitted in person at the meeting or in advance via a proxy card or the online proxy voting system, but it will not be possible to vote online during the meeting.

Outlook

With expectations of further reductions in inflation and a more benign interest rate environment on the horizon, there are reasons to believe that the macroeconomic outlook may be turning more favourable. Although this would be welcome, we are not relying on this to drive our business forward. We have a clear strategy, a strong balance sheet and a number of strategic and commercial opportunities that underpin our confidence in being able to deliver long-term profitable growth.

Adam Crozier

Chairman

29 April 2024

Whitbread PLC Annual Report and Accounts 2023/24

CHIEF EXECUTIVE'S REVIEW

Delivering8 STRATEGIC REPORT

1. step-changein performance

Dominic Paul

Chief Executive

We have delivered an outstanding set of results in 2023/24, led by the strength of our UK hotels business. Our increased levels of profitability, operating cashflow and return on capital reflect the power of our unique operating model. Our freehold-backed balance sheet, together with our strategy of continuing to invest, is allowing us to take advantage of the significant structural growth opportunity that exists following the decline in UK hotel supply, as well as expand our network in Germany.

Against this backdrop, we are increasing our momentum to deliver long-term profitable growth. In addition to our strong commercial programme, we have announced our Accelerating Growth Plan (AGP) to optimise our F&B offer at a number of our sites to unlock up to 3,500 room extensions that will enhance the service for our hotel guests and deliver increased operational efficiencies. In Germany, we are encouraged by our progress to date and the opportunities we now have to both build our brand awareness and refine our trading strategies further. We are on track to break-even on a run-rate basis during calendar year 2024 and with 10,500 rooms now open and a further 6,000 in the pipeline, we are on course to fulfil our ambition of becoming the number one hotel brand in Germany, based on number of open hotel rooms.

Our scale and vertically integrated model mean we have the commercial and operational levers to underpin our long-term profitable growth, strong cashflow and increasing returns on capital. We are on course to deliver a step change in our performance and look forward with confidence.

2023/24 Financial performance

The Group has once again delivered an excellent financial performance. Whilst Premier Inn UK remains the driving force behind our latest results, our growing German business also made encouraging progress throughout the year. Total statutory revenue increased by 13% to £2,960m while adjusted operating profit increased by 24% to £674m, reflecting the inherent operating leverage of our model. We have continued to build on our advantage across all areas of our operations, with a determined focus on growing our revenues, managing our costs and ensuring a high-quality service for our guests. As a result the Group delivered a 36% increase in adjusted profit before tax to £561m (2022/23: £413m). Adjusting items in the year resulted in a charge of £109m, including a non-cash, net impairment charge of £107m, most of which relates

to UK branded restaurants held for sale in connection with our AGP, the impairment of seven properties in Germany and £27m of costs relating to the Group's strategic IT programmes. The result was a 21% increase in statutory profit before tax to £452m (2022/23: £375m). A tax charge of £140m led to a statutory profit after tax of £312m (2022/23: £279m).

Our financial strength means we can continue to deliver attractive returns to shareholders, through a combination of dividends as well as share buy-backs. The Board is therefore recommending a 26% increase in the final dividend to 62.9p per share that will be paid to eligible shareholders on 5 July 2024 and further details can be found on page 184.

Whitbread PLC Annual Report and Accounts 2023/24