Welcome to the Whitbread Full Year twenty twenty one Announcement Q and A Session. My name is Ruby, and I will be your moderator for today's call. I will now hand over to your host, Alison Brisham, CEO of GripBrad to begin. Alison, please go ahead.
Good morning, everybody. Thank you for dialing in. I do hope you've had the opportunity of listening to the broadcast this morning to sort of get firm a grip on the the start point because we we think we'll just go to q and a, for this session. I suppose I will just have one small preamble, which is to say, this has been one of the most challenging years in, in Whitbread's two hundred and seventy nine year history. But we have been through turbulent times in that history before and have come through strongly, not least because we have, a great operation.
The advantages of a brilliant operating model, a fantastic brand and a significant amount of financial flexibility, which we have used to good effect this year to manage through what, as I said, has been a very challenging year. So I think we have weathered the financial impact so far and, got a good position for liquidity. We've managed to outperform the market throughout the year. And now we are ready for the next stage of the recovery, which is to invest again in order to consolidate our position as a sector winner. So with no further preamble than that, I will turn over to Q and A.
Thank you very much. Our first question is from Jamie Rollo of Morgan Stanley. Your line is now open. Please go ahead.
Good morning, Jamie.
Good morning, Al. Good morning, everyone. Three questions, please. First one is just on your Slide six, which is a helpful breakout of the sort of different buckets of customers and when you expect RevPAR to recover. So you're saying a RevPAR recovery by calendar twenty twenty three.
I'm just wondering if you could sort of hazard a guess for what the picture might be for calendar 2022, not fiscal, but calendar. And also, might be reading too much into that slide, but you've got the sort of vacation balance in Q3 and then you've got possibly winter COVID restrictions and obviously a sort of later recovery for international and office workers. So am I reading it right to suggest that you you you you're expecting a sort of sequential slowdown possibly in RevPAR after after the summer? The second question is on the £100,000,000 cost savings.
Oh, that was the third. That was
You still have one question. I'd already thought I got to already, Jamie. So carry on. Sorry. I couldn't
Sure.
Fair point. On the on the on the cost savings, Nicholas, I I think you said you expect to get back to pre COVID margins by 2024. So why is that not aligned with the RevPAR recovery a year earlier? And why are the cost savings not sort of dropping through to the bottom line to increase your margins? And then finally, if you could just talk a bit about the competitive environment.
I mean, you talked a lot about it verbally, but Travelodge's data suggests they're outperforming the market by similar degree to Premier Inn. So are you surprised by that given the advantages you enjoy? Thank you.
Great. Thanks. Thanks, Jimmy. What I'll do is I'll take the first and the last, and I'll leave Nicholas with the middle because that will make for a suitable sandwich, a delicious sandwich.
You know, I'm just home. Let's start with
your slide six set of questions. And this one it's quite difficult because we put the slide in, obviously, to to try and
be desperately helpful because we know that
this is what's on a lot of people's mind just in terms of where where we see the recovery. But, of course, it is indicative only and and to sort of give you a sort of sliding scale, and I'll I'll go through it. And and and it is important to note, we are still operating to quite a wide range of scenarios. You know that one of the ways we've managed through the pandemic in the last year has been to continuously run scenarios. It's been a delight for the finance and the operating teams to do that.
But, that has helped us enormously think through the range of things that are possible and preplan for how we've managed, you know, certain eventualities, however obscure they might have seemed. And so we were pretty well prepared for lots of things which did happen, which sometimes are in our core scenario, but actually was sometimes in an outlying scenario. And so this is just one snapshot on slide six of a range of possible scenarios. So I wouldn't want everybody to fixate on this and come back to it quarter after quarter to decide whether or not the colors have changed or we were right or wrong. We plan in a slightly different way and you'd expect nothing less, I'm sure.
And all of the scenarios we plan to are plausible even if some of them are worst case and better case than the one we sort of laid out here. So it it just in terms of going through it, you're particularly interested in, you know, the sort of recovery by '23 and and how we sort of see this. Well, we're already seeing the staycation bounce in terms of forward bookings and the excitement, in in the nation overall about people being able to to get outside, go to pubs and, start seeing relatives and going on holidays. And so, you know, I think we're we're confident that we will see, as a pent up demand for people to to come out from that. And I also think people are planning ahead to future leisure leisure recovery, but it does it's just the leisure recovery we've out requires rather more to happen than just, you know, a a great summer because that isn't the highest proportion of our estate that that gets that vacation bounce.
And leisure recovery consists of, you know, weddings and concerts and sporting events and people traveling to see family and having family, events at home, etcetera, and and staying for those sorts of things. So we're expecting that leisure recovery to take place over a longer period of time. The the business on the business side, they it's been pretty robust in in terms of trade activity. So what we historically would have called blue collar. And our 30 to 35% occupancy rate at the moment is largely people who have to travel for work.
They're essential travelers by definition because otherwise they couldn't stay with us. But that's quite a good proportion of occupancy coming from that sector. So we do expect that to recover fastest in the business sector. And on in in the normal office worker recovery, given that we won't come out of lockdown properly till the June 21, I'm I'm not sure what restrictions, if any. I know the prime minister this week was very optimistic there wouldn't be additional restrictions post June 21, but that remains to be seen.
Then I would expect probably office workers not to get back to the office in earnest even in hybrid working practices probably until after the summer. So September onwards is just broadly how we're looking at it. And although, again, there was some excitement this week around, inviting American travelers who were vaccinated to to come to Europe and I assume, therefore The UK, I think international, recovery is actually quite a prolonged, change in in in that. And, yes, in terms of, will there be any further lockdown or restrictions? Will there be a top up vaccination program in the winter when the NHS tends to be under more pressure and, a resurgence in the virus, which which fares better in the winter than it does in the summer?
You you know, we would be mad not to build that into our planning horizon. It would be lovely to think that it wouldn't happen, but I think we would be remiss of us not to think that we ought to plan for that eventuality, which I think you called out specifically, Jamie.
Yes. I mean, I think even the medical officers have all said, maybe ready for another wave later in the year, how big that is and what impact is, if you know, overall. So I've gone to the second
question.
Yes. You asked about the efficiencies, which we announced efficiencies of GBP 100,000,000 over the next three years. And your question was, we've said that we'd get back to kind of like RevPAR in FY 2023 and then the kind of the margins kind of come back a year after that. And your question was why was the margin a year later. And I guess there's two reasons for that.
One is we are going to be investing as we recover. And you can see today, we announced that we would be putting GBP 20,000,000 investment into marketing and also kind of channel management and development as well, which is kind of positive. And hopefully, you've all seen our advertising on television, bringing back Suhenny. And the second reason, although we've got efficiencies of GBP 100,000,000, we do have inflation of around about kind of GBP 40,000,000 to GBP 45,000,000, so a little bit ahead of that at the moment. So it will be a little inflation will be a little bit lower this year, more like kind of around about 35,000,000 because National Living wage is lower at about 2.2%.
But we do expect National Living wage to go back up to around about 5%, which will push that inflation back up to 40,000,000 to GBP 45,000,000. So the inflation is just running a little bit ahead of our efficiency program, but makes a good job to offset as much of it as we possibly can do as well. Okay.
Third question was about competitors. And particularly, Jamie, you were talking about Travelodge. I think I think Travelodge are doing pretty well alongside us. And I think if you strip us out, then the rest of the midscale and economy market is really doing very badly indeed because and I I think there's a couple of reasons for that. Firstly, I think that the model that we are both operate to is advantaged.
So they they also owner occupy and manage their business. They also, deal directly with customers. They also, over index on UK domestic, business. And so and and that model that that is not an OTA international led strategy, I think is advantaged currently and will be advantaged going forward. So I think that the businesses that have that model are doing better and that is also in Travelodge.
I think we're probably doing and I know there are some weeks where it goes either way, But I think that broadly speaking, we're doing better. And I think one of the missing items for you to understand that is refunds. We, as you know, refunded hundreds of millions of pounds of bookings throughout the pandemic at each wage wave of government restrictions, when terms and conditions would not normally have allowed it. And we thought that was the right thing to do. And first, certainly, in the first lockdown when nobody could have seen what was happening and what was coming, and ahead of us, building, more flexible rate classes, that was the right thing to do.
But I don't think Travelodge did, and therefore, they will be booking, revenue, which is sort of not refunded revenue if if you follow my drift on that. So so I do think they're doing okay and I think it's model related. I don't think they're doing as, quite strongly as I don't think they're performing as strongly as us, on a number in a number of ways, which which we analyze. And I do think that they're likely to see constraint going forward. I think that they've probably got a liquidity position, which is more, constrained than ours, both because they have a very large debt level now, are very highly leveraged, have a very big rental, role even even with rent reductions that were approved as part of the CVA.
And I suspect that the, that, you know, given the to given the leverage, I doubt banks will be putting more cash in. So and the equity providers haven't been overly keen to do that either. Think they've also put debt in. So overall, I suspect, therefore, that investment in the business over the next two to three years, either for growth, refurbishment or anything else, will just be a little bit more constrained. So I think overall, that lack of constraint for us will help us in terms of the investment to win in time.
Is that helpful?
Yes, very helpful. So can you just quantify the events the leisure events business? How big that is for you in your leisure segment?
It's really hard to separate to that actually, Jamie. We don't because it's you don't know if people are staying for the football match or they're staying for other reasons as well. So it's really hard to say.
Okay. Thank you very much.
Our next question is from Vicki Stern of Barclays. Your line is now open. Please go ahead.
Good morning, Vicki.
Good morning. Morning. Just firstly coming back to the point around the independents. I think you referenced in the presentation there's been a step up in the independent attrition that you saw post the global financial crisis during sort of 2010 through 2012 period. And could you just sort of say what what that looked like in terms of annual attrition compared with the sort of 1% average, I guess, you've seen over the last ten years?
Is it sort of 2%, three percent, 4% per annum during those years?
Quick quick answer on that, Vicky, is it it sort of went from 1% to 2%.
Okay. So doubled. And and with that sort of, you know, you're thinking now obviously, there's help in the system today, but you're thinking now as you look at that sort of example for what the next few years might look like?
Yeah. I mean, in particular I mean, we're still 48% independence in in The UK, but it's 72% in Germany. It's enormous. And the percentage of budget branded is so is so much smaller also in in Germany. But that move to budget branded is is is an accepted, structural shift that is going on.
So I I would expect in both markets to see some acceleration in the dropout, but we're not going to know that, you know, until we get through the next little period. You know, there's a lot of support, infrastructure in place for for the sector at the minute. When that starts to to to be removed and with some weaker demands still and people having used up reserves, I think we will then start to see that play out. So two things. One is some of the independent sector coming out.
Secondly, all all other players in the market are more constrained investments horizon because people won't have the cash flow and liquidity and therefore less rooms growth. Again, it's usually not the following year because when you've got a stake in the ground, you have to finish really to it doesn't make any sense at all to sort of mothball a project that's half built. But, so you see usually see some supply growth going in, But then then it dries up because people don't, you know, don't sign up new deals and and, across the board. And then on top of that sort of lack of refurbishment, CapEx, which just means that product gets really tired quite quickly and people's brand, dips and, consistency dips. And again, all three of those will be opportunities for Premier Inn, particularly as we don't need to stand still.
So we are targeting even this coming year, you know, sort of 4,000 to 5,000 new rooms growth, 2,000 Premier Inn plus rooms, a significant refurbishment program as part of that. And the commercial investment to make sure that we are driving and farming demand that is out there.
Thank you. Very clear. And on the sort of commercial side, the just sort of coming back on the guidance. So the GBP 20,000,000 marketing spend, should we think about that now as sort of recurring and in the base? Or that's sort of an element of that is to relaunch now and any of that will pair back in future
Yes. No, I that's in the base now. I think that's in the base.
Okay. Then some of the question on the GBP 20,000,000 COVID safe costs. Is that sort of things you have to do now to be COVID safe? Or you think this is probably best Going
There's 25,000,000 for COVID safe kind of costs and that's mainly around labor, some consumables as well. We would hope we'd be able to kind of end well, hopefully that goes naturally anyway as COVID disappears, but also would look to kind of naturally kind of engineer that out. So you'd hope that kind of goes over the next year or two.
Great. And lastly, just coming back to Germany, just an update, on the sort of opportunity in terms of any m and a ability to sort of pick up more portfolios, etcetera.
It's a bit of the same position. I mean, we we were, pleased in October to do the first deal, and it it was it was a it was good because it sort of really showed people that there were going to be opportunities. It was a distressed portfolio of which we cherry picked our the hotels that we wanted from from it rather than having to take the whole. And it was therefore, you know, from us quite a unique deal and and involved as you said moving over, lease arrangements, so renegotiating with landlords for leases and therefore sort of setting rent position at the right rate for us and, getting contributions to refurbishments and getting on with it. So it was, you know, not having to deal with brands rolling off or anything like that.
So I I think that, you know, that it was it was helpful indicator of the fact that there was distress in the market. And but in the same way as in The UK, there's probably a bit of a lag still, I think, with government grants and support propping up businesses through, the next few months. And I suspect we are therefore going to see more distress when those programs come to an end. And suddenly enough, when demand starts to recover but have not recovered in full, and during that recovery period, I suspect we'll see quite a lot more distressed assets and action being taken. So we anticipate that in Germany, we would see some good opportunities in the market for nonorganic growth.
And we will be in a position because we're financially set up to do so to take them from when they arise.
Great. Thanks very much. Our next question is from Bilal Aziz of UBS. Your line is now open. Please go ahead.
Good morning, everyone, and thanks for taking my questions. Three for me as well, please. Firstly, just again on the independents. I guess one of your competitors suggested that you do not expect some of the independents to open up as early as the May 17. It feels like your commentary is still very much that this will be a more gradual capacity reduction.
So any comments potentially on that, please? And secondly, appreciate you don't have a crystal ball. But on the forward bookings, can you perhaps put those bookings in context of when you reached your peak occupancy in September and any expectations around that as we go into the reopening? And then very finally, I appreciate this might be difficult, but any guidance for working capital for the year ahead? I appreciate this is lumpy, but thank you.
Yes. I'll just ask just
to kick us off really with the question on the independents. So if we think about The UK, 48% of the market independents, in normal times, the structural shift, has been the case for many years, is about 1% of that market falls out every year. That's without there being a knock in any way. So during the financial crisis, as we said to Vicki's question a minute ago, that was higher during that period and then settled back down. But there's a sort of gradual decline of the independents, which is a structural issue.
And we would expect, as as in the last financial crisis, some acceleration of that for a period of time. In terms of, people reopening, we we would anticipate that a lot the the market will reopen on the May 17. We're expecting everybody to reopen, but can reopen. We we know that there will be at that point some people who choose not to, but we won't know who they are until either the May 17 or actually till the June 21. Some some people may wait till the June 21.
So so we at that at that stage, we'll have a view of what an initial shakeout in the sector might have looked like, and that could be not just the independence. It could be some franchise businesses that which which might be branded that there could be a whole raft of of shake out at that point. Not expecting it to be enormous because people have had quite a lot of support. Don't forget with lot of independence, they'll be, you know, cash run businesses and they will but, you know, they'll they'll employ a lot of family and they will therefore manage through the pandemic. But what we expect then is for the next twelve to thirty six months to be a period where we see more of a fallout of the independent sector and not much growth in in other areas.
And that's the place where from a structural perspective, it leaves a leaves a gap, and it that's the gap that Premier Inn can fill. That if that was clearer on what we think is the independent position. You wanted to talk about forward bookings Yeah. Which is is is kinda hard to call.
It's it's it's kinda hard to call. All all we all we
can say, as Alton said earlier, it's during the July, the
August, early September, it's a touristy month. In the hotels where we have got tourist destinations, which is about 15% of our hotels, looks pretty full. We were pretty full last year. We've had a bit more warning this time. We can open up, so we're a bit full a bit earlier, which hopefully has a bit of a halo effect, but there's not a lot else we can say about that.
Yes. We'd probably say we'd still expect our tradespeople to be traveling, and that sort of run relatively consistently with occupancy levels that we've been seeing already whilst we've been open for essential travel only. We've had a reasonable occupancy. Most of the people in that essential travel category will continue to be essential travel. So that along with the the uplift in leisure in summer months, you know, it should drive a higher occupancy level than we've been seeing, but we can't really predict much beyond the summer months at this stage.
And And that's The UK. Germany, we're probably seeing Germany probably about two months behind The UK at the moment where they are just because they're behind a little bit behind the curve on the kind of vaccination program overall. And your last question was on working capital, which is difficult because it depends if you're on the up or you're on the down, which way it goes. We had a kind of GBP 70,000,000 outflow on working capital due to kind of deposits this year. Overall, hopefully, we're on the hopefully, we're growing, and therefore, there is a kind of cash positive overall.
But I mean, for planning purposes, I know a lot of analysts are using kind of flat working capital at the moment just to be on the kind of cautious side. Thank you very much.
Our next question is from Jafar Masdari of Exane BNP Paribas. Your line is now open. Please go ahead.
Hi, good morning everyone. Two questions for me, please. Firstly, just on
the CapEx guidance. Could you elaborate on your €235,000,000 U. K. CapEx plan for full year 'twenty two? How does that look in terms of maintenance versus expansion compared to the reduced level of this year?
And actually, maybe worth describing what counts as maintenance and what counts as expansion, things like refurbishments, the rollout of Premier Plus, by how much are they reduced compared to your initial plans, please, or to a normal year? And then secondly, very mindful not to read too much into Slide six, but I was curious in parallel to those buckets of demand recovering, which is pretty much exogenous to you, what does your marketing schedule look like in terms of what you're doing to adapt and to drive that demand? For example, how do you market specifically to people who may not have taken a staycation at Premier Inn in years?
Okay. Why don't I take the marketing question? You take the CapEx question, Nicola?
Yes. So on the CapEx, right, two thirty five million for The UK CapEx guidance next year. There's about $100,000,000 of that, which is based on kind of what we call we call it product improvement and maintenance. And it is you're right, it is fairly broad. It covers anything from refurbishments, which is roughly around about £45,000,000 We've got repairs and maintenance, which is just kind of core roofs, windows, etcetera, overall.
And then it also covers IT, and those are split kind of being fifty-fifty between the rest of that spend overall. That's all.
It's And on marketing, we've got quite a number of commercial levers that we are working on at the minute. So first of all, we've got quite a big marketing campaign, which is probably going to have quite a good share of voice. I don't think there'll be many many others out, which is TV, social media, digital platforms, radio. It's it's a very multidisciplinary and integrated campaign. We we that that sort of drives demand and that will drive demand from existing customers, but new customers as well.
And we saw some very good statistics early on from that campaign. So we're very positive about how that will help us with driving demand. We then obviously farm the demand, and we have done a lot of work on digital on our digital and search activity to make sure that we are have more reach in our search activity than others, and that's much improved. We've also reinvigorated our website, with better user conditions, which means that we're seeing higher conversion rates through the websites. We relaunched our business cooker tool and enhanced the credit management facility, particularly for small and medium enterprise businesses where that is a real requirement, which again is causing us to get a much higher cut through and conversion rate.
And then we've broadened our use of travel management companies to to a very significantly broader group. That business which is new business for us because those business travelers would not previously been allowed to stay with us. If you have to book through a travel management company, you can't book direct. So so that reaches a set of business customers we couldn't normally reach. It sounds like a beer effort, but and we think that, therefore, will help us sort of both drive new demand and farm that demand better.
So it's quite a big program of commercial activity, some of which has been completed and some of which is ongoing over the next few months.
Super. That's super helpful. If I could maybe just follow-up on the CapEx point. So am I correct in thinking 100,000,000 U. K.
Maintenance compares to in the last few years, it's been around 150,000,000 And if I'm correct, your competitor, Travelodge, is saying they can spend as much as €40,000,000 of CapEx in calendar twenty twenty one. At peak, there was 65,000,000 So I'm just curious what are the subcomponents within that do you think they're going to have to cut a lot more than you're doing? Because on the headline number, it's not fully comparable as a model, but it looks like their CapEx cuts is only a tiny bit above yours. Does that make sense?
Yes. I can't comment on them overall. I mean there are some differences overall. I mean we have a regular refurbishment of our hotels of our the whole of our hotels, our bedrooms and our ground floors, which hopefully you can see, and that comes through traditionally in kind of the RevPAR, the rate we get as well. So you'd expect us to do that as well.
We also own 60% of our freehold, so we're to maintaining the kind of value in our freehold estate. They're 100 leasehold, I think, nowadays as well. So there are some differences overall. And we've invested quite a lot in IT, making sure we keep that kind of digital 100% direct coming to us as well. So I don't know what they've cut and what they haven't cut overall.
Our
next question is from Tim Barrett of Numis. Your line is now open. Please go ahead.
Good morning, both of you. Could I start with a question about food and beverage? F and B was it looks like it's down over 90% in Q4, obviously, for regulatory reasons. But how do you how do you expect it to rebuild? Do you think we should expect it to be correlated with occupancy?
Or can you go faster this summer because of all the pent up demand? And then the second area to touch on, please, would be Germany and German distribution. A very atypical year, guess. It looks like you're at 99% direct, but I suppose we shouldn't read anything into that. So can you talk about strategy for distribution in Germany this year?
Thanks very much.
Of course, to both. I was we'll probably both, make comments on both both questions. I'll I'll I'll kick off, I'm sure Nicholas will will will be seen. Yes. You're quite right.
Yes. Being completely closed tends tends to give you a a clear problem in in the SMB business and we were and have been and are still largely closed. So we have opened the first set of sites on the April 12 from outdoor perspective. And that they they can do no more than breakeven when they're outdoors only. So just to sort of manage that that expectation.
But we we should be reopening on the May 17 in full and and but with social restrictions, which limits covers and, you know, makes it more constrained environment. And then the June 21, we may or may not, you know, relieve, be relieved of some of the social distancing requirements. But at the moment, I I I can't call that in terms of whether or not they will be relieved or or, there'd be another thing in place. For us, it's always a combination a combination of local business and the return of local business and the return of local guests to the restaurant and the return of the hotel guests and the sleeper diner ratio. So so it is a combination for us of both of those things.
The most of our breakfast business is the hotel. You know, a a good percentage of the dinner business is is hotel, but but rather more of it is local diners. So it's I my view is it will be a combination of the two. But, Nicholas, you know, know you I you're That's it. Yeah.
And then on Germany, yeah, you're quite right. There's not really we we as you know, when we started in Germany, we we decided we would start by being direct only. And we at the time, we only had Frankfurt as a hotel. But if we went OTA, it would be hard to come off it. Whereas we went direct, we can always go to the OTA.
You know, that's that's always a default option available at any point we want to pay the commission. So, but at the start of this financial year, when we went into this last year, we only have, you know, three we we three or four hotels trading, and and two of two or three of those had only been opened for a matter of weeks. And then during this year, we've obviously grown the estate very significantly, but, through acquisition of Foremost where we've been rebranding, closed the hotels and rebranded them during the year and refurbished them, taking the opportunity of very low demand, and low demand year to do that. We then bought the Centro portfolio in October. And again, we determined decided that in a world where occupancy levels are running at, you know, just over double digits, we the the best thing to do is to close them immediately and refurbish quickly as we can rather than keeping them open during a quiet period and refurbishing them when potentially demand might be coming back.
So that's what so really, you can't read a lot into into it. Our preference is to build a direct distribution model, which requires us to have brand awareness to do that, as you know, so people have to know to come to you. We prefer it always to say to people that the best deals that they're gonna get are through coming to us direct to our website. We'd like to start the marketing campaigns now. We have a national footprint with with business customers and corporate customers who now can look at a portfolio of 30 hotels across many different towns and cities and start to have big business booking direct relationships with us as we do in The UK.
But we are absolutely pragmatic. We are absolutely nonphilosophical. What we want is the business to be a success. And if that success requires us to have some paid for activity through commission and OTAs, then that is a route we would be perfectly willing to take.
Yes. I mean, the thing is we can leverage off everything we've got in The UK. So all the work we've done that I've described on The U. K. Website, that's live in Germany as well.
The work we're doing on travel management companies and GCs is all going live in Germany at the same time as well. So you get that kind of that benefit as well. And the 99% of direct, I mean, it's a very good number. That's a U. K.
Number overall. I think it's 100% in Germany at the moment because we're using OTAs at all. Our airport sites usually kind of fill up 1% or 2%, which are fairly quiet at the moment as well. So you just got to take that into account.
Do you give a figure on marketing in Germany? It's a topic that comes up quite a lot in terms of how you build an Anglo brand into Germany.
No, we don't. We've given in the guidance. We've given some kind of what the kind of central kind of cost support center costs. We've got some marketing in there as well. So it's going give you an overall view.
Our next question is from Alex Brignall of Redburn. I
just have a couple of questions to try and, look at the recovery expectations. The OTAs have talked about how the smaller the property, the better it's doing, and Airbnb has has been massive and the other alternative accommodation sites have been their number has been massively outperforming the hotels. So I guess my question on that is what's your expectation as to a recovery? Because that's a slightly different message to what you're saying about outperforming the independents. I think the independents are referring to a sort of slightly bigger property.
So the smaller properties seem to be doing better. And then the second question is on corporate travel. Clearly, your corporate travel is quite blue collar, but hotel overall hotel corporate exposure is is quite high and corporate travel doesn't come back, then there is an overall loss of demand to hotels. And it seems quite difficult to assume that you will avoid price deflation if there is demand loss from the hotel industry. So I wonder if you could talk about your RevPAR recovery in the context of probably some RevPAR deflation in the rest of the market and how you would sort of avoid that.
And then follow-up questions to that and just in terms of what that might change in your outlook. Your your plan on adding hotels and the the return on capital assumptions that you have in your hotels, how would you flex those plans in a in a world where and it's it's it's not your base case, but where RevPAR simply didn't come back to where it was before. How would that affect, your your new build, Sastry? Thank you very much.
That's fine. That's fine. Just I mean, starting, starting with the independent sector, The independent sector's quite varied. And, of course, you you can be in your mind, you might be thinking of an independent sector that's got small boutique four or five star properties that are well invested offering a great guest experience. But that's a small proportion of the independent sector.
And what's the bigger proportion of the independent sector would be the massive BNBs on real seafront or Pimlico High Street, which if you Right. See them are incredibly underinvested, a bit random, and not very safe and secure, and probably don't instill people with a huge amount of confidence in terms of their health and and, well-being. So, actually, it it they it's quite a sweeping statement to say either that small properties are doing better than large ones or that, all that independents might do better than than others. I mean, I think if I was calling out a a a theory at this stage, I would say in our estate, hotels that had good car parking were doing better than those with no car parking. Because in this environment, people haven't wanted to use public transport and they wanna be able to park their car outside the hotel.
So so that, you know, they they would be the sort of things that were quite important to guests who are currently traveling and who might travel going forward. I think you're quite right in your assessment of the fact that could be trickled down. You're right that white collar office conference activity is the purview of the four and five star market. I mean, the people with ballrooms and conference suites and theaters are the four and five star players. And, and therefore, you know, in the event that that demand isn't there, what will they do and how will they respond to that is something we will have to watch very carefully.
But our price points are, don't forget, incredibly different. Pre pre pandemic, our average room rate was about 55 to 57. That that is a you know, compared to a four or five star players, average room rate, particularly on event nights over conferences, that is a very significant place to have to get to, to compete with us like for like. So, see, I I we can't rule out a trickle down effect and the whole the overall market demand effect. We we don't think we're immune, but but part so part of the competitive, response that we've got has been broadening our own share of the business market through things like the travel management company.
So in order to offset any of the trickle down effect that we might see is to have a broader base in the first place. So and to do all of the credit management, the improving of the business booker, There a lot of the business booking activity, once it's with us, given that people are discounted rates directly with us and are booking directly with us for their for their teams, that's very sticky business for us. You know, those are people who are very loyal, and and our systems are integrated into their systems, and they're booking for large numbers of employees to stay with us. So, those are the actions we've taken to offset. And then finally, on the pipeline, we've done a lot of scrubbing.
A lot of scrubbing on the pipeline already. So as soon
as this happened, we ran all of our models, sites that we had approved but hadn't signed. We really gave those a good scrub. Some of those we walked away a lot of those we walked away from overall. Some of those we renegotiated as well. So we're fairly comfortable actually with the pipeline that we have.
And I guess that we're in The UK, that's where we're more focused on opening those pipelines and getting those efficiencies right than necessarily signing up new and adding to that pipeline. We think that will come again, but it might the focus right now is on the opening pipeline in Germany at the moment overall. We do expect, though, that there will be constraints in the supply new supply coming into the market overall. And we saw this in 2009 to 2014, 2015, there was very little new capacity opened, which did help RevPAR overall and if you get the independents decline. So we may be a squeeze on price from the kind of above us kind of what we've seen historically is the four and five stars have to hold their price discipline because their square meter per room per rent doesn't stack up unless you do hold that as well.
So we're fairly comfortable with our pipeline being able to deliver good returns over the longer term.
Thanks so much for those answers. And just to be clear on the pipeline, assumptions that you put into your models, that as you've laid out to us in terms of the RevPAR recovering to pre pandemic levels on the time frame you talked about?
Yes. Yes. And we as I said at the beginning, we run the number of scenarios.
Thanks so much.
Great. Thanks, Our next question is from Joe Thomas of HSBC. Your line is now open. Please go ahead.
Morning, Alison. Good morning, Nicolas.
Good morning. Good morning.
I just wanted to ask you, on your presentation, the prerecorded presentation that you did, there was a there a couple of comments that made me stop and think. One was that you're talking about the return on capital in line with historic levels pre COVID. And there's another one about opening costs for new hotels that were in line with levels outlined at the Capital Markets Day in 2019. I'm just sort of wondering why over the course of this pandemic, you don't think that there has been sort of an improvement in the outlook there. So if we're thinking about market share, etcetera, why that can't get better and maybe on opening costs, perhaps why that can't drop?
And then so that would be my first question. The second thing that I wanted to ask about is you were alluding to the capacity again coming out of the market and sort of hotels on real seafront and Pimico High Street. What happens to those properties as they come out? Do they tend to be convertible into something else? I just sort of wonder what the risk is that they end up in in the hands of a competitor instead.
And then the final final thing is I'm just a little bit confused on the €20,000,000 of investment, and sort of chunk of that's going into corporate travel agents, etcetera. Is there going be a RevPAR impact as well as a cost impact? Or is that just sort of the net impact that you're expecting to see going through the business?
So just to of put this out quickly, the last one is it's not just about travel management companies. It's broader about investing in our distribution platforms, but it's also about advertising as well. You probably saw hopefully, you've seen our new advert, which went live a week ago as well. So it's a broader than that overall. Just in terms of what happens to hotels on the Pimlico Road or Shepherds Bush Road, one near me, last time, a lot of them turned into residential developments because that's probably what they're most useful.
So they might do that as well. They also tend to change hands into other hotels, but drop a star or drop down a level. So kind of if they retain hotel or just a different hotel or they go into a kind of B and B over it. But last time, it was mainly residential development. It would be interesting to
see if that's still there. I mean, it's
still the hot housing market overall. So I think that's probably what they'll go into. In terms of competitors, these tend to be small hotels. They tend not to go into the big the IHGs or the Akor brands. They're not kind of that suitable for that.
And we haven't seen much we haven't seen any expansion in IHG or kind of Akor kind of budget brands in recent years. Your first question was just about kind of return on capital and why and kind of the opening costs kind of opening cost, why we haven't seen improvements versus kind of 2019 and why won't we be being more bullish and have been talking that up. I guess we look at our return on capital. We've given kind of 12%, 13% return on capital over many years. We think that's a good return on capital.
We're it's a good premium to where our WACC has been, and we don't think kind of driving that return up above that is necessarily a good thing for the business in the long term. Actually, what's better is actually keeping that return, keeping that consistency, reinvesting in the business, reinvesting back in the customer again to kind of build that long term sustainability overall. So that's really what we're trying to do. And we know that no other businesses if we can do that, no other businesses in that kind of position to be able to do that, which gives you a really good competitive advantage as well. And secondly, we talked about it earlier, kind of we are an inflationary sector.
So we do have to do a lot of work to kind of make sure we're offsetting that. But it's getting that right balance between using your efficiencies to offset inflation and to invest in the company overall.
Our next question is from Stuart Gordon of Berenberg. Your line is now open. Please go ahead.
Good morning. Was just curious if we look at your sales recovery scenario and we sort of frame that August to October, I think you've spoken about 33% is the business existing tradespeople bucket. Is that similar over that period last year is the first part? Second, if we look at the other buckets, obviously, over that period, international leisure events and business offices, you are today probably still pretty close to zero. So how did you frame the construct of that occupancy improvement, in 2020 amongst the other buckets?
And in particular, what was the kind of swing between the business and leisure components over the summer months? And just as a sort of housekeeping point, looks as if cash burn from the sort of $80,000,000 per month you speak about when all the hotels are closed due to breakeven is fairly linear. Is that a fair assumption to me as we as we go through the recovery phase? Thanks.
Okay. It's it's hard to answer the question on, on occupancy. I'm gonna I'm gonna give it a go nonetheless in just whether or not whether or not I'm really, doing justice to the question. So, yeah, I mean, last year, we were closed, from the start of the year until July and we reopened the hotel estate during July and August and have the benefit of, a good bounce of leisure guest travel in staycation type properties. So as we said, so 15% of our of our business and the return to, to sort of, trade work and, people who have to physically, be present at work during that, the the the summer and then into September and the October.
And I think we saw occupancy at peak at about 58%, if my memory serves me right, at that about that period. And then we went into tier restrictions. So in some places, quite severe tier restrictions and and, lack of movement around The UK, which then culminated in, second national lockdown, more tier restrictions, and the third full lockdown from Christmas onwards to the end of our financial year. So really, that is quite a mess to sort of be able to sort of unpick into sort of giving you any real sense of, of trends. What I what I can be clear about though is that under normal circumstances in in normal years, about 50% of our business is leisure and 50% is business.
And of the leisure travel, there is, of course, the, coastal and tourist and destination, areas, which is about 15% of our estate. But there is a very, very broad leisure market that stay with us for all sorts of reasons, not just events, but family occasions and general sort of, visiting people and having weekends away and all huge array, at which which that recovery, we are expecting to see a almost a better recovery over the course of, the next few months because, the restrictions feel like, I suspect, for people that they are coming to an end down vaccination program is complete. Last year, there there wasn't a vaccination program at this point in time, and therefore, you know, there was much more, cautiousness and people very much more circumspect. So I I I would be expecting to see both the staycation bounce and the leisure recovery, and particularly that leisure recovery being maintained, you know, post the first week in September. Whereas last year, probably, certainly the staycation dropped very dramatically when when schools go back and, didn't really, put pull forward everything else.
On the business side, just to reiterate again, half our business is usually, for for one to the a more refined term, blue collar, and half of it is white collar. But we don't index on conferences and meetings, because we don't have those facilities. You know, we don't have gyms and mini bars. We don't have ballrooms, conference theaters or meeting rooms. So we we index on on people, you know, cost conscious business travel.
And we have a high proportion of business that books directly We have not historically ever played in the travel management market. That is brand new, addition that we have made this year in signing into travel management companies to grow our distribution reach. So, we're expecting the blue collar market, which has we have seen a sort of relatively resilient position on during lockdown during the closed period to continue and to continue its recovery and be be a relatively strong recovery. And we're expecting the white collar office work type business to be much, much later to recover.
So that's certainly not starting that recovery really until after September and to take a while to come back and to to potentially have structurally altered, which is why we're growing our reach in business to make up for any lost ground that may be there. Hopefully, that covers it. And how else to sort of describe this versus last year? Just on
the cash burn, Stuart, good question. So just in the first half of the year, we talked about kind of when we were closed about GBP 80,000,000 cash burn when we were completely closed. That actually because we were opening in the first month in March turned out to be about GBP 75,000,000 cash burn per month across the first six months per month. In the second half, we've had kind of half that, so it's been about GBP 40,000,000 cash burn per month. And that's been roughly split about $25,000,000 operating cash outflow per month and about 18,000,020 million dollars CapEx per month overall.
And will that continue to be fairly linear as we head towards sort of the mid-50s?
Yes. We've cash breakeven at kind of 55% occupancy and break down 6% or 7%.
Okay. Thank you very much.
Thanks, Jim.
Our next question is from Leo Carrington of Credit Suisse. Your line is now open. Please go ahead.
Good morning.
Good morning, Liam.
Good morning.
On the TMC distribution opportunity, why haven't this been
a focus in the past?
Is this a lower net margin business for you or some other reason? And have you quantified how many extra guests this could reach, do you think, perhaps on a normalized basis? And then second question on the Premier Plus rooms, restarting the rollout of these. Can you remind us on the pricing uplift that you'd expect to have from these, how that's trended over the last year with all the restrictions? And then if you could do your best to quantify their rollouts in 2022 and 2023, that that would be very helpful.
Yes. The and I'll I'll kick off and then Nicholas will intervene. Yeah. We for TMCs, we haven't we've always we've had historically viewed them a bit more like OTAs and that we, you know, you have to reach, agreements with them on what commission level, commission's charged, what, you know, how what rates are used or not used. And, and we have historically had some relationship with TMCs, but not paid any commission at all.
And and they they largely, TMCs have used us because their clients might have asked for us rather than because they're promoting us through the TNC, into into their clients. And and we haven't had to, because historically, of course, Tuesdays, Wednesdays, and Thursday nights, we were pretty full. And so, you know, the the peak the peak business travel nights, which will be the ones they would be, you know, looking to fill. You know, if you took an example of, you know, a hotel on the South Bank, we we that hotel would be full on those three nights. So why would we need to go into that sort of distribution arrangement?
Now we've now that we think that, we we ought to play in order to broaden the reach in clay in case we have any issues with any structural decline in any part of that white collar workforce, particularly because it's mainly white collar and TMCs, then we think that this is a is a good opportunity for incremental access to guests. And there are quite a lot of TMCs in The UK, so there's quite a lot to individually negotiate and transact with. And we have done that during the taking the opportunity during lockdown to do that so that we'll be ready to go once, the market restarts. And we'll at that point, we will see then what the size of the opportunity brings, but I haven't got a prediction for that at this stage that I that I would want to share.
Okay. Thank you.
Was that was that was that the only question? Was there another question?
Yeah. Oh, Premier Plus. Sorry. Though before we move on, you you asked the second question about Premier Plus. And, yeah, historically, the returns profile has been very healthy for Premier Plus rooms, for both business and leisure.
They have had good sales rates, I. They tend to sell out fast, and so they're not the last rooms to be booked because there's nothing else left and, you know, therefore, people are going to pay a higher price because there isn't anything else. They tend to be the first booked rooms and therefore are very popular. And they have commanded a price premium of sort of 10 to £20 depending on the location and the night and, you know, the the situation. Probably the succinct answer to that.
Okay. Thanks. And on their rollout in terms of this year and next, have you got any targets in mind?
Yes. We said we've done 500,000,000 historically. We gave a pause this year, and then we'll do about 1,500 million this year.
Thank you very much.
And then review.
Thank you.
Okay. Thank you.
Our next question is from Ivor Jones of Peel Hunt. Your line is now open. Please go ahead. Good morning.
Good morning. Good morning.
Now that we can see
that you weren't kidding about, getting his number one in Germany. When you've got to number one, when when you've got to number one, you'll still be a much smaller business, obviously, than Premier Inn in The UK. Is that a good business? Or is it obviously a staging post or a bigger business at which you get adequate returns from scale and the benefit of the brand and distribution. So where is Germany really heading now?
Looks like that's a real target. And second thing, carrying on the discussion about travel management companies, could you write that into a discussion about how you're going to drive either price whether you're going be price led or occupancy led during this period of recovery? What are going to be like as a competitor? You're talking about 5% to 15% discount on travel. You mentioned 83% of the rooms are in the regions.
In a normal year pre COVID, do you mind going back to what the revenue split would have been regions against London? And lastly, forgive me, I've forgotten what you said in the past about Whitbread's plans to repay government support. Is it maybe or definitely not? Thank you.
Okay. There's a bunch of there's bunch of things in there. Start let's start with Germany. In the and yet yes. I I think it is good to see the the acceleration that we've been able to achieve.
And the fact, as as you as you know well, I know there isn't really a a market leader that's got both the momentum of accelerated growth or the baseline, you know, largeness. That means that we can't catch and be the the number one in Germany. So, you know, it feel it feels an achievable target and it feels even more achievable now with 30 open hotels and and and the 42 more in the pipeline. And and certainly, from our perspective, it's the tip of the iceberg because you're right. We have 800 hotels in The UK, and the German market is bigger, a third bigger than The UK market, and is still in the early stages of structural independent decline and budget branded growth.
So we just think it's a great market and it does have sort of quite an almost unlimited market potential over the next couple of decades. But we think, I mean, the businesses that we are competing against and, you know, Motel One being the closest competitor,
you
know, similar competitor, they they are good business. That's a good business with good returns and and and a good EBIT EBIT profile. So we would expect to have a good solid business at this size with a good EBIT profile and a good returns profile. And for that to get better, you know, as it gets bigger for for it just to get better and better and and grow and and with an available option to grow. So we're we're still very positive about Germany.
We we look at each transaction, organic, inorganic, and, yeah, each individual site on its on its returns merits. Mhmm. You know, again, with a with a revised
model,
post pandemic to make sure that the hurdles that we set are hurdles that we can meet. And we whilst we would have accepted lower returns, certainly for our first acquisition in order to get scale, that's certainly not been the case latterly. So we've we've kept the hurdles which give us a good returns profile. Does he did he add anything to that, Nicholas? No.
No. I think that's fine. Yeah.
Nick, can
I just ask if you had if you had access to
more capital and investor confidence, is that a growth plan in Germany that could, there could be a step change in growth? Or are there natural constraints that limit you to the rate of growth you're currently talking about?
Yeah. The I mean, the the there are we don't feel limited, in in that there are there are the one of the natural constraints is is that there aren't any other big businesses. Yeah. They, you know, the the the the the growth the the structure of the German market, which doesn't have the big REITs, etcetera, and, and is an owner occupier market where you sign leases or buy freehold and build is is naturally a slower growth market. You know, if you're gonna put a stake in the ground, you're gonna be waiting three years for your hotel to get built.
And if you're working with a developer, they can't build it any quicker. So so there are some constraints to the speed of growth. And there aren't, you know, an unlimited supply of acquisition opportunities and quite a lot of them are small acquisitions. But, you know, like, we made an acquisition of three or four hotels, last year as well as the foremost 19 as well as the Centro 13. So they're they're not, you know, they're not big, but we can roll up.
There are roll up opportunities for sure, and that and we're not, therefore, feeling constrained.
I'm gonna I'm gonna raise through your next three questions, if you if you don't mind. Actually, I'm just kind of conscious of conscious of time. The the TMCs, you asked about kind of price led or occupancy. That's going give you a really unhelpful answer. We're kind of occupancy led where we've got low occupancy and price led where we've got high occupancy.
We dynamically price. So first, if you're looking at the tourist locations over the summer, we're price less because we know they're going to fill. But if you're looking at Central Manchester, Central London, we're kind of occupancy led right now overall. So and it changes. You kind of create the 5% to 15% for discount.
That's the kind of corporate business rate that we are able to give. And that's based on kind of volume businesses overall. So it's not just a straight discount overall. It's based on kind of how much business each of them does with us. And of course, it's often they're kind of Monday, Tuesday, Wednesday night, which are the kind of higher priced nights overall.
The London region split, I think we kind of got about 16% of our rooms in London. I think that's about 20% of our revenue in a normal year. You've got to look at it. It's quite different in terms of what's out of London. Out of London right now, which is about let's say, the half of the London portfolio is behaving much more like the regions at the moment and Central London.
That's the bit that's kind of tougher at the moment. And then your last government was about repaying government support. I guess the way we look at this is we're round about the footsie 70. But in terms of taxpayer or tax collector for the UK government, we're I think we tended to be around 35 to 40, the 40 biggest companies in terms of taxpayer and tax collector across the business. So we believe that the government grants that have been given to us have been specific for our sector because we are the hardest hardest hit.
We won't be directly paying back the government grants, but we do think the quicker we recover, the quicker we'll be paying back through taxes to the overall
And if I could just add to that. I I mean, I I think we are the perfect company that the government needed and wanted to support. So, you know, that we we've had government support about 270,000,000, but our shareholders have put in a billion in a rights issue. We have raised finance with a green bond program, and we have a suitable appropriate debt maturity position. And we have paid our people and paid our suppliers and even paid our rent bills.
And in as we recover, the reason we are the sweet spot for the government to support is as we recover, as Nicholas points out, we will revert to paying, and collecting a large amount of tax, which will, within a year, would reap would would reap more benefit than the support we've had so far. But equally, we're a large employer. We would anticipate hiring more people. We are probably gonna be helpful in the solution to youth unemployment. We have the highest number of apprenticeships in the industry.
We are helping the investment led recovery by investing £350,000,000, and we are, helping the leveling up agenda because we're regional, not just South, East based. And so if you take the sweet spot of all of that together, I I think we are absolutely the right company to have been supported. I think having been hit in a step to where you are closed through the regulation and are not allowed to open and have no revenue, that that level of support has been appropriate for the circumstances. And therefore, no, we don't anticipate repaying it.
Good. I
hope that's clear.
Thank you.
We're try and finish it half past if that's okay. So we probably got room for a couple more questions today.
We got any more questions? Yes.
We have two questions remaining. The next one is from Richard Clarke at Bernstein. Your line is now open. Please go ahead.
Hi, Hi, morning. Hi, good morning. Thanks for taking the questions. Three, if I may. Just the
first one, actually, following on from what
you just said. There's been a couple of press reports around sort of saying that the companies are struggling to sort of rehire their staff coming back after furlough. And just wondering whether you're suffering from any issues there or whether that actually could be a competitive advantage relative to the market. Second question, we've seen some of your competitors' peer companies talk about a greater demand for room technology, mobile phone door entry, controlling the TV, mobile check-in, check out, etcetera. Is this something you're investing in?
Is this included in in raising CapEx? Will this be included in the Premier Plus rooms? Anything you're seeing to match demand there? And then the last one, probably a little bit more prosaic, but the impairments you've made, are any of the projects that aren't going ahead or any of those in Germany, is that the foremost impairment related to that? And then could you quantify what the underlying positive benefit might be from reduced lease payments, depreciation, etcetera, from taking the impairments this year?
Okay. Yes. The short answer on the Germany question is no, we haven't stopped our pipeline in Germany. And we haven't impaired any open sites. We haven't impaired open sites.
So that's quick. But do want to take
the other one? Yes, yes. So just in terms of the impairment, the largest impairment we've got in our balance sheet is around about the is about the Foremost acquisition because the timing of that. So there's three over GBP 200,000,000 of that is impairment for that impairment. The other impairment is GBP 100,000,000 is across the rest of our estate mainly all overall. In
the And there's various kind of reduction it's spread over many, many years, Richard. So in terms of the reduction in rent and depreciation, it's fairly minimal over that time overall. In terms of your question about great investments in technology, yes, the answer is yes. We're continuing to look for a way for automation. We're slightly, I guess, ahead of the game in terms of most people book online, and that is their check-in, check out already.
We have kiosks in a lot of our large sites already. So we're kind of along the journey in there. Some of the other things you talked about, technology is quite large investments to go forward. We'll do that when the time is right. But you're right, we're continuing to move along that journey overall.
And then do you want to talk about staff ability to hire staff? I mean, it's
Yeah. Disadvantage. Yeah. I mean, we we we're a strong employer. As you know, we've got a strong employment brand.
In in normal times, we have a really low industry level attrition level of people, which is very high compared to many of the industries that you that that others operate in. Because hospitality itself is a very transient industry and has a lot of, attrition. And indeed many of our competitors could could have over a 100% attrition a year. So it is it can be that high. Well, ours in normal circumstances, is more like a a a just below 40% attrition level, which as I said is is very strongly industry leading by a significant margin.
And so, we and we have had less attrition, obviously, during the pandemic than in a normal situation because people have been furloughed, and so they've stayed with us. So we've got a good strong staffing level. We will be hiring and recruiting, and, you know, even things like temporary seasonal workforce in coastal locations, which we do every year. So we will be out in the market. We will be hiring.
And at the moment, that is going well, and we are, you know, taking on apprenticeships for people, and taking on new staff and hiring in a sensible way. We're quite conscious. We've heard some of the market stories that life might be difficult, but there is quite a high unemployment rate also out there at the moment that we are able to tap into higher certainly than we ever thought when we did think we might have some constraints vis a vis Brexit and the European labor pool shrinking. So at the moment, all is well, but we'll keep a close eye on it and we are out in the market, but successfully hiring new staff.
Thank you very much.
Thanks, Richard.
Our final question is from Andre Juilliard of Deutsche Bank. Two
very short questions, in fact. First one is about Germany. We know that I know that we've talked a lot about it this morning, but just wanted to have a rough idea of the critical size you have in mind in this country, considering you've got close to 70 hotels between the existing one and
the
pipe? What is your view on the midterm critical size? Second question on CapEx. You are investing more than expected this year, but what is the kind of level for the recurring years to come you are expecting?
Okay. So I mean, Germany, from German side of it, we're really pleased with having made the leap this year to get into multiple cities. The important thing in terms of the plat building what I'd call a platform business, which which means being able to market in country because it is German domestic business and leisure guests that we are interested in marketing to marketing to. We're not we're not interested in Australians or Chinese people visiting Germany. It's the German domestic business and leisure traveler and all of the things that Premier Inn brings, like its direct distribution, like its business to business platforms, all operating.
And for that, you need to be in multiple cities. There's no point asking BMW to have an automatic booking system with you if you're only in three, in Munich, Frankfurt, and Hamburg. So, so the platform is really important that it is varied in terms of cities and that's what we've started to see now that when when we reopen our rebranded hotels that we've now acquired and 30 hotels reopen, that will give us a presence in a large number of German, cities. And, you know, we've got another 42 in the pipeline, but they come on stream over the next two to three years. So we would be expecting to top up both the pipeline and if possible, any, more instant opening of hotels, which would be inorganic acquisition, to to grow that platform as strongly and as rapidly as we can.
And in terms of the long term, I mean, the the size of the market is bigger than The UK, more fragmented than The UK, and, and we do think we ought to be able to replicate our success. Although at the moment, we have a midterm target of 60,000 rooms in Germany as our sort of, as our network plan in terms of how we work around that. So that's our aspiration for Germany. And capital, you're right, spent about $230,000,000 last year, $250,000,000
this year. And that's a lot of that, as we've discussed, is on opening space in Germany and in The UK as well. Historically, we've kind of spent around GBP 400,000,000, $450,000,000. It's quite it can be quite lumpy depending on the freehold leasehold mix that you've got. At the moment, it's more leasehold just because due to where the price of freehold properties is.
But we'll kind of get back towards the kind of GBP 400,000,000 hopefully, but we will kind of monitor that as see how the market recovers.
Okay. Thank you very much.
Thank you. Thank you, Andrew.
I think that's us finished our questions. So that was a really long session. I thank you all all of your questions. And if you need anything else, don't hesitate to contact us. And have a good day, everybody.
Yeah. Thank you, everyone. Yes. Thanks very much.
This concludes today's call. Thank you for joining. You may now disconnect your line.