Good morning, everyone. I'm Dominic Paul, and I'd like to welcome you to Whitbread's interim results presentation. Today's presentation will take place by remote webcast, followed by a live Q&A session at 9:15 AM, when Hemant Patel, our Group CFO, and I will be happy to answer your questions. Details of how to join the call can be found on our website. Now that I've been in post for just over nine months, I thought I'd start with a few of my own reflections on the key drivers behind our continuing success, as evidenced by our numbers today, and why we remain confident in being able to continue to replicate that success in the future. I'll then hand over to Hemant, who will take you through our half one performance in detail, including an update on our capital allocation framework.
I'll then take you through what we can see in terms of UK supply, how we are going to continue to drive long-term growth, and deliver what I believe will be increasingly attractive returns for shareholders. Our unique model sets us apart from most other hotel groups. It means we can deliver a fantastic and consistent service to our guests, whilst also delivering attractive and growing returns for our shareholders. We own all aspects of the value chain, giving us complete control over our distribution, our commercial strategy, and operations. Our asset-backed balance sheet provides us with a flexible source of funding and a strong financial covenant, making us an attractive partner in both leasehold and freehold transactions.
These elements drive high operating leverage, which, when coupled with our focus on managing costs, means that even during periods of high inflation, we're able to continue to grow, not just revenue, but also margins. Premier Inn is the clear market leader in the U.K., which is down to our ability to control our end-to-end operations whilst continuing to invest in our customer proposition. As I will come on to talk about later, there is significant growth potential in the U.K. and the opportunity to replicate our U.K. success in Germany. With our unique business model and growth opportunities in the U.K. and Germany, we have a clear strategy to execute our plans at pace.
As I outlined at the full year results in April, my priorities remain: extending our market-leading position in the U.K., replicating that success in Germany, and continuing to ensure we have the tools we need to support future growth by investing in our teams, landing some key technology projects that will transform our ability to create more value, driving cost efficiencies across all areas of our business, and executing our ambitious Force for Good sustainability program. The combination of our unique business model, our strong market position, and clear strategy is a real source of competitive advantage. With a favorable supply backdrop, we now have an opportunity to create substantial value by continuing to invest at attractive and growing rates of return, whilst rewarding shareholders through a combination of dividends and share buybacks. I'll now just touch on some of the highlights from our first half results.
These are outstanding results. Even after particularly strong performance last year, revenues, profits, margins, and returns all grew strongly, demonstrating the strength of our business model and our focus on operational excellence. Our U.K. business is the real engine of this growth, and Premier Inn extended its outperformance versus the market, which meant that revenue grew strongly. Despite inflationary pressures, U.K. profit margins increased to 27.5%, and U.K. return on capital employed increased to just under 15%. In Germany, we continue to make good progress, led by our cohort of more established hotels. Even with a relatively soft market over the summer months, our losses halved versus last year, and we remain on track. The strong uplift in profit converted into significant free cash flow that we are reinvesting in future growth and returns to shareholders.
Given the strength of our trading performance, robust balance sheet, and our confidence in the outlook, we are therefore recommending an increased interim dividend and a further GBP 300 million share buyback. We believe that we can continue to build on this strong performance, leveraging the strengths of our model against what we see as being a particularly favorable supply backdrop. While demand for hotels remains strong, the declining independent sector and a challenging financing environment has meant that U.K. supply remains well below pre-pandemic levels. Back in April, based on our previous analysis of future pipelines, we said that supply was not likely to return to pre-pandemic levels until 2026. Having refreshed our analysis, we now think that the number of U.K. hotel rooms won't return to pre-pandemic levels for at least five years. This presents us with a fantastic opportunity for growth.
We have both the balance sheet and the in-house property expertise to continue to grow market share, while others are more constrained. Our potential in Germany is also significant. As well as being 40% larger than the U.K. market and with a similar demand profile, it has a large and declining independent sector and no clear market leader. We are therefore determined to replicate our U.K. success in Germany and become the number one operator there. Later on, I will come back with some more detail around the structural shift in supply, as well as an update on some of the commercial initiatives that are in plan to continue to drive the business forward. But first, I will hand over to Hemant, who will take you through our performance in the first half in more detail and give an update on our capital allocation framework.
Thank you, Dominic, and good morning, everyone. As Dominic has already mentioned, these are outstanding set of results. We had a very strong year last year, continued to build on this momentum during the first half, with further revenue growth driven by Premier Inn U.K. and our continued progress in Germany. Our estate growth, coupled with the inflationary pressures, meant that operating costs increased. However, the operational leverage inherent in our vertically integrated operating model and our focus on driving cost efficiencies meant that EBITDA grew to GBP 638 million, 23% higher than last year. This strong growth in EBITDA and a marked increase in interest receivable on our cash balances meant that adjusted profit before tax was GBP 391 million, 44% ahead of the previous year.
Our strong profit growth in the U.K. and progress in Germany meant that Group ROCE was well ahead of FY 2023, despite our ongoing expansion in investment programs. I'll now run through the drivers behind this performance, beginning with Premier Inn U.K. U.K. revenue remained strong in the half, with accommodation sales 15% ahead of last year, resulting in statutory revenues up 14%. As mentioned, room growth and inflation meant operating costs increased. However, the inherent strengths of our operating model and our focus on delivering cost efficiencies meant that pre-tax profits increased to GBP 407 million, and the pre-tax margins increased to 27.5%, which is three percentage points ahead of last year.
We also achieved our highest ever level of returns for our U.K. business, with a return on capital employed of 14.9%, well ahead of our pre-COVID average of around 13%. Premier Inn U.K. continued to trade strongly, with U.K. accommodation sales 15% ahead of last year, supported by a constrained supply backdrop. Occupancy remained high at over 84%, and both average room rates and RevPAR increased by 14%, all whilst adding over 1,000 rooms to our estates over the last year. Although the year-on-year growth rate softened in the second quarter, accommodation sales remained consistently 55% ahead of pre-COVID levels across the half.
Our commercial strategy is underpinned by our highly dynamic and automated trading engine, which rapidly responds to changes in demand to optimize the trade-off between occupancy and average room rates to maximize revenue, all whilst remaining mindful of our value proposition. Having increased occupancy but taking less price versus the wider market last year, demand for our hotels remained high during the first half. Improvement to our trading strategies, coupled with our brand strength and the quality of our customer proposition, meant that we were able to maintain occupancy whilst increasing prices slightly more than the market. As a result, we were able to increase our RevPAR premium versus the market to GBP 6.73 and grow 2.6 percentage points faster than the competition. Despite having increased our prices year-on-year, we continue to offer excellent value to our hotel guests.
In real terms, our average room rates are still behind where they were in 2009, and the gap between our room rates and those charged by the upscale and luxury segment has increased versus FY 2020. Turning now to Germany. Our ongoing estate expansion and the progressive maturity of our more established hotels meant that statutory revenue was well ahead of last year. Increased operating costs reflect our estate growth and high levels of inflation. We are continuing to refine our commercial strategy and proposition in the German market, thereby reducing costs while continuing to deliver a quality guest experience. Adjusted losses reduced to GBP 14 million versus a GBP 25 million loss in the same period last year.
We continue to be satisfied with the progress of our cohort of more established hotels, which delivered a profit of GBP 6 million over the last 12 months, versus GBP 3 million in FY 2023 and a GBP 1 million loss in the 12 months at the end of August last year. We remain on track to deliver reduced loss before tax between GBP 30 million and GBP 40 million for the year, and continue to make good progress towards our medium-term goal, a return on capital of 10% to 14%. Following a solid performance in Q1, we were impacted in the second quarter by some softness in market demand over the summer months, and we have continued to learn how to adapt and develop our trading model for the German market.
Our performance versus the market tends to fluctuate, depending on the performance of individual catchments and the location of key events and trade fairs. In the current trading period, which I'll come on to later, we have seen a further recovery in performance, helped by an uplift in demand during September, which benefited from a number of events and trade fairs taking place in key cities. While we still have some way to go before reaching maturity, we continue to be encouraged by the performance of our cohort of more established hotels. Our strong trading performance delivered an impressive increase in adjusted operating cash flow that reached GBP 483 million in the period.
The phasing of our ongoing program of investment in both expansionary and non-expansionary CapEx, together with an increased final dividend and share buyback, meant that our total cash outflow increased to GBP 104 million. However, given the strong operating performance, we ended the period with a net cash position of GBP 67 million. Our balance sheet is underpinned by a large freehold portfolio, providing us with a strong financial covenant, protection from property cost inflation, and a flexible source of funding. The strength of our covenant and balance sheet gives us the ability to invest in both freehold and leasehold opportunities, putting us in the best position to secure the sites that we want and in the best possible locations. It also gives us the confidence to invest through periods of uncertainty, like the pandemic, enabling us to drive attractive long-term returns.
Since the period end, we have completed a number of property transactions, including the purchase of a freehold site in Fenchurch Street, London, and the sale of an office building that we built as part of a hotel development in Clerkenwell. Remaining Investment Grade unlocks a number of commercial and strategic benefits for us. It also makes us an attractive partner when entering into property transactions. At the period end, our Lease-Adjusted Leverage was 2.5x , well within our threshold of 3.5x . We also received an upgrade to our rating from Fitch in the first half to BBB flat from BBB-. Given the strength of our financial performance, our confidence in the outlook, and the headroom available against our Investment Grade metrics, we have, as promised, revisited our capital allocation framework.
I'd like to briefly outline our key capital allocation priorities, as highlighted in the framework I shared last year. First, maintain Investment Grade leverage metrics. Second, continue to invest in growing and maintaining our estate in both the UK and Germany at attractive levels of return. We will also look for bolt-on M&A opportunities where they meet our strict investment criteria. Third, we will continue to grow our dividends in line with earnings. And finally, if funds are available, and dependent upon outlook, return excess capital to shareholders. Given the strength of our financial performance and the positive trading outlook, we are declaring an increased interim dividend of GBP 66 million, and also announcing a further GBP 300 million share buyback to be completed by the time of the full-year results announcement in April.
Future returns will be subject to the group's financial performance, the trading outlook, and the availability of high-returning investment opportunities. The board is committed to continuing to review the framework on a regular basis. With GBP 400 million of cash returns having already been returned to shareholders, these further steps will take total shareholder returns this financial year to GBP 766 million. Turn to current trading and our outlook for the remainder of the year. Current trading in the U.K. remains strong, and our forward-booked revenue position is well ahead of where we were this time last year, driven by higher average room rates. Whilst the macro environment remains uncertain, we remain confident in being able to drive further revenue growth whilst maintaining our reputation for both quality and value.
Our confidence is underpinned by the following factors: Demand for our hotel rooms remains strong, with no sign of any slowdown. U.K. hotel supply is constrained, and this is supporting pricing in the market. We've also taken less price in the market in the past, and the gap between our own prices and that of the upscale segment has actually increased versus pre-COVID, while our average room rates are lower than they were in 2009 in real terms. Our automated trading engine means that we can react dynamically to changes in demand, optimizing the trade-off between occupancy and rate. And finally, our new room pipeline means that, unlike most of the market, we will continue to grow our estate.
In Germany, after a relatively soft market in the summer, revenues over the last six weeks are more than 40% ahead of last year, and our cohort of more established hotels delivered increased RevPAR of EUR 71. We laid out our guidance for FY 2024 at our full-year results in April. This is largely unchanged, apart from our latest views on our capital expectations. We are increasing our CapEx guidance to GBP 500 million-GBP 550 million for the current year, reflecting a number of freehold purchases being made in the second half of the year. This will be offset by GBP 50 million to GBP 100 million of disposal proceeds as we look to recycle capital into high-returning opportunities, and we've already raised GBP 47 million of disposals in the year to date.
We remain confident about the group's performance of the full year, led by a continued strong performance in the U.K., reduced losses in Germany, and the benefit of interest on our cash balances. I'll now hand back to Dominic to take you through our strategic priorities in more detail.
Thank you, Hemant. I'll now spend a few minutes going through our current plans, some background on the supply picture as we see it, and some of the initiatives that will continue to drive the business forward. I think it's helpful to first provide some context. Over the last six years, despite Brexit and the global pandemic, we continued to invest through the cycle and added over 20,000 rooms to our estate across both the U.K. and Germany. While our German business is not yet mature, it is growing quickly, and we're excited about its long-term prospects. The U.K. business, meanwhile, has doubled its capital base and has delivered consistent and attractive returns of around 13%. Our continued strong profit growth meant that the U.K. business generated a record level return on capital in the first half of almost 15%.
As I covered in my introduction, a key strength of our business model is the fact that we capture all aspects of the value chain. This delivers high margins and gives us full operational control, ensuring a consistent and quality guest experience whilst reducing our exposure to property cost and inflation. Significant free cash flow means that we can continue to invest with confidence, maintaining and extending our leading position in the U.K., whilst growing our presence in Germany and rewarding shareholders through a combination of growing dividends, complemented by capital returns. I'll now go through some of our current and future plans in the U.K. and Germany before finishing with an update on our progress towards our Force for Good sustainability commitments. I'm going to begin with the U.K.
Premier Inn is the U.K.'s largest hotel chain, with a reputation for providing affordable hotel rooms in fantastic locations where our guests are welcomed by our friendly teams, have a great night's sleep, and can then enjoy one of our famous Premier Inn breakfasts. E ven with 84,000 rooms open today and another 7,000 rooms in our committed pipeline, we still have significant growth potential. Our scale and focus on investing in our customer proposition means that we hold an unrivaled position for both quality and value in the U.K. market, a position which we have held for many years and are determined to strengthen further. There is strong demand for hotel rooms. In the first half of the year, we sold 9% more room nights than we did in the same period before the pandemic, and at much higher rates.
Our leisure guests travel for a broad range of reasons, while within our business segment, we capture demand from tradespeople and office-based workers. As a result, we have a well-balanced customer mix, which enables our automated trading engine to maximize occupancy across the cycle. As I mentioned earlier, the structural shift in U.K. hotel supply is creating an even bigger opportunity for us to increase our market share and drive attractive and growing levels of return. The independent sector has been in structural decline for many years, and this accelerated during the pandemic, with over 70% of hotels which closed already having been converted to alternative use. That is therefore a permanent shift in supply, which is not coming back.
The marked rise in both interest rates and inflation is putting even more pressure on independents and is also causing a slowdown in new construction projects as developers struggle to secure funding. Hotel construction projects can take anywhere between two and five years from planning to opening, providing good visibility on what is coming. Since we published our last piece of work on the structure of the market last year, interest rates have increased significantly, which we suspected may have hampered supply growth further. We have therefore updated our work, and our latest view is that we now don't expect U.K. hotel supply to recover to pre-pandemic levels for at least five years. This presents a significant opportunity for us to grow our pipeline, something that we are in a unique position to take advantage of.
As an owner-operator with a strong balance sheet and in-house property expertise, we are able to do both freeholds and leaseholds, and we can also act as a developer to create even more value through capturing development profits. This slide highlights two recent examples where we're already putting capital to work by purchasing freeholds in prime city center locations at attractive yields. Our direct distribution model dictates our approach to marketing, which is focused on driving millions of visits direct to our website. Our brand marketing campaigns ensure Premier Inn remains front and center when people are looking for a short stay trip in the U.K. Our digital marketing is fully integrated into our automated trading engine, ensuring marketing spend is targeted in those locations where there is an opportunity to increase RevPAR. Our trading engine then optimizes the trade-off between occupancy and rate to maximize revenue.
The impact of some improvements to our trading performance are highlighted on this slide. You can see that we've increased the average room rate without increasing the maximum price. This is a result of improved trading, the addition of more rate classes, offering both flexibility and value, as well as more enhanced room products such as Premier Plus. We have talked previously about the importance of business customers. Not only do they tend to travel more frequently, they also book flexible rates and are easier to serve, the net effect of which is that they generate more profit. In a high inflation environment, all businesses are looking to manage their costs. Being at the value end of the market, we are well placed to benefit from the trade-down effect, given the increased differential between our prices and those of the upper market segments.
We are therefore continuing to improve our proposition for business guests, ensuring we are providing the channels and products which suit their needs, so that all businesses, whether large or small, book with Premier Inn. As you can see, our channels are proving popular with good growth in revenue from Business Booker and travel management companies. We take huge pride in our reputation for both quality and value. At the heart of this is meeting our customer promise across all of our hotels night after night. With strong demand and a reduction in supply, we experienced high levels of occupancy throughout the first half. The shape of demand across a week means that Sunday nights are usually a shoulder night between business and leisure guests, and therefore tend to be our lowest occupancy night of the week.
With occupancy in the high 80s, as we were in the second quarter this year, this effectively means we are pretty much full for the rest of the week. Now, despite being pretty much full, we continue to see further improvement in guest satisfaction. This is down to our operational control, but also to the dedication and hard work of our teams. By ensuring our teams are paid properly, well-trained, and are able to progress in their careers, we allow them to focus on doing what they do best, delivering a great experience for our guests. We also continue to invest in ensuring our rooms remain at the high standards our guests expect. The combination of each of these factors means we attract large volumes of repeat bookings. Approximately 86% of all bookings made in the first half were by guests that have stayed with us before.
Food and beverage is really important to our hotel guests, particularly breakfast. The high levels of occupancy across our hotels and changes to our customer journey have helped to drive incremental breakfast sales in both our integrated and branded restaurants. Our new integrated ground floor concepts are proving to be a popular social area for our guests and are helping to increase drink sales. While encouraged by our F&B performance in the first half, the pub restaurant market remains challenging. We are therefore continuing to look at a range of options to help improve the performance and return to our brand restaurants, while ensuring that we safeguard the quality experience for our hotel guests, and we will provide further updates as we make progress. Our position as the market leader has taken years of investment and hard work.
However, we are determined to continue to improve our performance and customer proposition. It is why we're in the process of upgrading our core reservation system, as well as our digital networks, both of which will result in us having a cutting-edge platform, one that will deliver material future benefits for the group. The upgraded system is already installed across all of our German hotels, and we are currently rolling it out across our U.K. hotels, a process that we hope to complete next year. In order to stay ahead of the market, we are continuing to evolve and improve our offer to meet the ever-changing needs and desires of our guests.
The latest iteration of our Premier Inn standard room, what we call ID5, is being rolled out across our estate following a successful trial earlier this year, and we will have 4,000 ID5 rooms in our estate by the end of the year. As mentioned on the previous slide, our new integrated ground floors are creating a great bar atmosphere and proving popular with our guests, as are our new Silentnight beds that are being rolled out across our entire estate. While determined to keep improving our customer offer, as a budget hotel operator, I am determined that we also remain focused on controlling our costs across all areas of our business.
We have an excellent track record of delivering material cost savings, and our current program is on track to deliver GBP 140 million of cost savings between full- year 2022 and full- year 2025. Moving now to Germany. I touched earlier on the characteristics and market dynamics, which make Germany such a significant opportunity for us. As a reminder, Germany is 40% bigger than the U.K. and is highly fragmented, with a large independent sector which is in decline. There is no clear market leader. The largest operator has approximately 2% market share. The market is therefore highly fragmented, meaning that owner-operators like Premier Inn are better placed to expand through acquiring, leasing or converting existing properties, or by building new hotels. There is also scope for growth through selective bolt-on M&A.
As in the U.K., the market has a high volume of short-stay domestic travel and a well-balanced customer mix between business and leisure. We've already made great progress. Having gone into the pandemic with just six hotels open, we now have 57 hotels open, all in prime locations. The map on the left of the slide shows that we are on course to achieving a national network with a presence in all major cities. We have 10,000 rooms open, with a further 6,000 rooms in the committed pipeline, making us a sizable player. We are the fastest growing hotel brand in Germany and are well on the way to becoming the number one operator. We've committed over GBP 1 billion worth of capital and are on track to achieve our ambition of reaching 10% to 14% return on capital.
Our strategy in Germany is clear: to replicate the success of our U.K. model and deliver attractive long-term rates of return. We have made good progress, and while not yet profitable as a whole, we are continuing to learn and adapt our model to the German market. Our commercial strategy continues to evolve as we trade through our first full- year without any pandemic-related restrictions. We've already learned a huge amount and are applying those learnings across our estate, in particular, how the demand builds around event periods such as trade fairs. Having used online travel agents in the past in the U.K., we are running a test on Booking.com to understand whether this channel can drive incremental revenue and profit while also raising brand awareness. We have continued to tailor our customer offer and have recently opened our first Premier Plus rooms in our Berlin Alexanderplatz Hotel.
We are also expanding our payment options, which will help to broaden our appeal and improve the customer journey. To help us manage and execute each of these initiatives, we have appointed a new CEO for our German business, who will report directly to me. They will be responsible for ensuring we remain on course to becoming the number one operator in Germany and making sure we deliver our target levels of return. We are focused on driving greater guest volumes through our business channels and are combining our Business Booker and Business Account tools into a single platform called Inn Business, that will simplify the journey and improve the overall experience for business guests. We are also broadening our reach through local sales teams and by establishing deeper relationships with travel management companies.
While there is much work to do, as you can see, we have a clear plan and remain on course to achieve our objectives. Finally, I wanted to update you on our industry-leading Force for Good sustainability program. Our three-pillar program covers the environmental and social agenda of our ESG strategy and is underpinned by stretching targets, which hold us to account for delivering meaningful change, some of which are included on this slide. We have continued to make good progress in the half and will provide a full update at the time of the annual results in April next year. The examples on this slide hopefully bring to light some of the progress made during the first half.
Highlights include: We supported another cohort of students graduating from our Mini Premier Inn with hospitality qualifications as a result of our partnership with Hereward College that is focused on helping those with disabilities enter the workplace. We opened our first all-electric hotel in Swindon, which will demonstrate the feasibility of a hotel running purely on renewable energy as we continue to make strides towards reducing our Scope 1, 2, and 3 carbon emissions. We have continued to support those affected by the conflict in Ukraine and donated over 2,000 items of bedding and mattresses from our bed replacement program with the help of our charity partner. Our carbon target commitments have now been validated by the Science Based Targets initiative as we continue our journey towards net zero. In conclusion, our unique operating model, market position, and strategy are combining to deliver outstanding financial results.
The structural shift in the U.K. hotel market is more permanent than we first anticipated. This is creating a significant opportunity for growth in the U.K. in addition to our potential in Germany. Our confidence in the outlook is underpinned by our current trading performance, our positive forward book position, and the structural shift in U.K. supply. Reflecting our confidence, we have declared an increased interim dividend and announced a further GBP 300 million share buyback. We are in excellent shape, trading well, and with significant opportunity for growth and increasing levels of return. Thank you for joining us this morning. Hemant and I will host a Q&A session starting at 9:15 AM. U.K. time, and we look forward to taking your questions then. You'll be able to find the details of how to join the call on our website.