The company, which has 30,000 staff in 1,200 its hotels and restaurants across Britain, said it plans to spend about 23 million pounds ($31.63 million) on salary increases and one-off bonuses as it deals with a "material number of vacancies".

Staff shortages due to the health crisis are widespread but Britain is also dealing with the fallout from Brexit, which has significantly reduced EU workers across a range of industries from poultry to the haulage sector.

"Overall within the industry there is a shortage of people who are available for work, particularly experienced people where the training load is less," Chief Executive Alison Brittain told a media call.

"I think it (labour shortages) is a combination of a number of factors that have all come together at the same time ... We just have to work out over a little period of time whether it is a structural issue or a temporary issue."

The company said high occupancy levels at its hotels combined with the market-wide supply chain issues and tighter labour supply, especially in tourist locations and London, had created a challenging operating environment.

The owner of steakhouses Beefeater and Bar+Block reported a narrowing in its adjusted pretax loss to 56.6 million pounds for the six months ended Aug. 26 from 367.4 million pounds a year earlier.

Shares in Whitbread, which is now seeing pre-Covid levels of demand in some regions, were up 3% on the FTSE 100 blue-chip index by 0825 GMT.

The company said revPAR - a key performance indicator for hotel operators - on a like-for-like basis in the UK could potentially reach full recovery at some point in 2022.

"The pandemic has likely seen smaller operators forced to close, creating a gap into which Whitbread can expand in the UK," Hargreaves analyst Nicholas Hyett said.

($1 = 0.7272 pounds)

(Reporting by Muvija M and Chris Peters in Bengaluru; editing by Uttaresh.V and Jane Merriman)

By Muvija M and Chris Peters