...Leading UK Hospitality Business: The rating reflects Whitbread PLC's leading position in the less cyclical budget UK hospitality sector, with its Premier Inn (PI) brand, together with a lack of meaningful diversification outside the UK. About 75% of the group's operating profit is generated by hotels and restaurants, and 25% by Costa Coffee. Strong Trading Performance: Whitbread continues to perform well, with PI benefiting from a recovering hotel market in the UK regions. Like-for-like group sales grew by 6.5% in the financial year to February 2015 (FY15), driven by Whitbread's strong brands, with an increase in underlying pre-tax profit of 18.5%. We expect positive operating performance in FY16. Freehold Expansion to Reduce FCF: Whitbread is pursuing organic growth at its hotels division and at Costa. This will be achieved partly via freehold acquisitions, particularly in London. We project sustained revenue growth and improved EBITDA in FY16, but FCF should turn negative due to higher...
