Premier Inn owner Whitbread backs turnaround plan, urges vote against Corvex seat

Whitbread Firms Stance on Turnaround Plan, Rejects Corvex Board Seat Request

Whitbread's Response to Corvex Management and Strategic Turnaround Efforts

Background: Corvex Management's Campaign

Oct 13 (Reuters) - Premier Inn owner Whitbread on Tuesday backed its five-year turnaround plan and recommended shareholders vote against activist investor Corvex Management's demand for a board seat.

Britain's largest hotel operator is defending a strategy that includes job cuts and the closure of branded restaurants, against Corvex, which last month escalated its campaign by demanding a seat on the board.

The US-based hedge fund dropped its earlier push for an outright sale in September, saying it would join the board "with no preconceived notions and no predetermined agenda — only a commitment to maximizing risk-adjusted value for all shareholders".

Whitbread's Five-Year Turnaround Plan

Key Elements of the Strategy

In April, Whitbread CEO Dominic Paul unveiled plans to shut 197 remaining branded restaurants, sell £1.5 billion of freehold property and potentially cut about 3,800 jobs, as he pivots the group toward a higher-margin, pure-play hotel model.

External Challenges Facing Whitbread

Impact of Business Rate Hikes and Energy Prices

British business rate hikes announced in last year's autumn budget saddled the UK's hospitality sector with higher costs, further exacerbated by a surge in energy prices triggered by the Iran war.

Financial Performance and Outlook

Recent Results and Management Commentary

"With excellent strategic progress and strong current trading momentum, our plan is working," Paul said on Tuesday.

Whitbread beat first-half adjusted pre-tax profit expectations and backed its full year outlook, as strong hotel trading in the UK and Germany helped offset cost inflation and the disruption of exiting its branded restaurant business.

Sales Performance in Key Markets

In the five weeks to October 1, the hotel operator's UK accommodation sales were up 4.5%, while sales in Germany climbed 31.2%.

Upcoming Shareholder Vote

The company said a general meeting to consider Corvex's resolution to add a new board member will be held on November 9.

(Reporting by Yamini Kalia in Bengaluru; Editing by Jochelle Mendonca and Louise Heavens)