Good morning. I'm Dominic Paul. I'd like to welcome you to Whitbread's Financial Year 2023 results presentation. Today's presentation will take place by remote webcast, followed by a live Q&A session at 9:15 A.M., where Hemant Patel, our Group CFO, and I will be delighted to answer your questions. Details of how to join the call can be found on our website. Turning to our agenda this morning, I'll start by giving a brief overview of our trading performance and the outlook for the rest of the financial year. I'll hand over to Hemant, who will take you through the numbers in detail and update you on our capital allocation framework. I'll conclude by spending some time talking you through how we're gonna continue to drive profitable growth and deliver great returns.
Before we begin, I just want to say how excited I am to be back at Whitbread. As I will come onto in a moment, the business is in great shape and trading strongly, as evidenced by today's results. That trading momentum has continued into the current financial year, and I believe we have a great opportunity to continue to grow profitably, not just here in the UK, but also in Germany. We plan to replicate our UK success and have already built an impressive network of high-quality hotels in prime city locations. We have a fantastic platform for us to deliver sustained growth at superior returns, both of which I am determined to continue.
Having spent significant time out in our hotels and restaurants with the teams here in the UK and in Germany, I've been struck by the passion and dedication that underpins our ability to deliver a consistent quality guest experience while remaining great value. This is what differentiates us from our peers, and is at the core of our UK model, a model that we are now on course to replicate in Germany. Our strategy is the right one. My key areas of focus over the coming year are, first, to profitably drive our model so that we can continue to strengthen our market-leading position in the UK. Second, to continue to progress towards replicating our UK model in Germany. Third, delivering our program of technology improvements. Fourth, continuing to deliver cost efficiencies, invest in our brilliant teams, and drive our Force for Good sustainability program.
Yes, there is work to do. Reaching our goals will require real effort. We must execute with precision and at pace. We have a fantastic platform for growth, a clear plan, and a great team to deliver it. I'll now start with a summary of our results. These really are a great set of numbers. They are a product of our differentiated operating model, working in tandem with the business strategy. My predecessor, Alison, and the entire team executed brilliantly. through the pandemic in what was undoubtedly one of the group's most challenging trading periods in its 280-year history. Revenues and profit have recovered strongly to exceed pre-pandemic levels. We also continue to outperform the market. We delivered significant revenue growth, strong cash flow, and increased our UK returns.
Whilst the recovery and market demand and the structural decline in the independent sector provided a helpful backdrop, it was a combination of our own initiatives and our clearly differentiated business model that has delivered such an impressive operational and financial performance. We remain confident in the full year outlook, that confidence is underpinned by a number of important data points. First, we have real momentum and are already delivering excellent results, achieving record levels of occupancy and strong RevPAR growth in the UK. In Germany, despite our brand still being relatively unknown, we are growing rapidly, led by our cohort of 18 established hotels that are already trading in line with the market. Second, current trading has been strong with positive momentum continuing across a number of forward lead indicators.
Third, we are continuing to see significant opportunities to invest that will drive attractive long-term returns for our shareholders. Given our positive trading performance, strong balance sheet, and our confidence in the outlook, we are recommending an increase to the final dividend and an initial GBP 300 million share buyback that will be completed during the first half of full year 2024. I will now hand over to Hemant, who will take you through the numbers in more detail.
Thank you, Dominic. Good morning, everyone. I'll begin by running through our financial highlights for the year. As Dominic's mentioned, our performance this year has been driven by primary revenue U.K., with statutory revenues well ahead of last year and 27% ahead of pre-pandemic levels. Whilst inflationary pressure and our continued estate growth meant that operating costs increased, EBITDA grew to GBP 888 million, which was 18% ahead of pre-COVID levels. Adjusted profit before tax was GBP 413 million, up 15% versus FY20. There were GBP 39 million of adjusting items, including net impairment charges and property disposals, resulting in statutory profit of GBP 375 million. As I'd flagged at the half year, capital expenditure increased to GBP 546 million.
This reflects our estate growth in both the UK and Germany, our refurbishment and maintenance program, as well as a number of strategic IT projects. Even with a sizable CapEx program, our strong financial performance generated a cash inflow for the year, with net cash increasing to GBP 171 million. I'll now go through the drivers behind our performance this year, beginning with Premier Inn UK. Throughout FY23, our UK hotels performed significantly and consistently ahead of pre-pandemic levels. The strength of our business model, combined with our commercial strategy and market-leading position, has driven record levels of occupancy and a marked increase in average room rates. Importantly, all whilst adding over 6,000 rooms to our estate. On the right-hand side of this slide, you can see the figures for the full year, with UK accommodation sales 37% ahead and RevPAR 27% ahead of pre-pandemic levels.
Our proprietary trading engine dynamically responds to changes in demand. This led to a strong occupancy outperformance versus the market across the year. Whilst we continued to grow average room rates, we took less price than the market, giving us further opportunities to drive rate going forwards. This, in combination with our estate growth, meant that our total accommodation sales significantly outperformed the mid-scale and economy market across the year, and we maintained a healthy RevPAR premium. Our performance versus the market is all using STR data on a total inventory basis, which is consistent with the way we've presented during the pandemic and throughout FY23. Going forward, we will be switching back to the standard methodology. In Germany, pandemic restrictions were only lifted during the first quarter of the financial year, with market demand rebounding strongly during the summer, supported by higher volumes of leisure travel.
In the third quarter, leisure travel remained buoyant and business travel also recovered, supported by the return of a number of large international trade fairs that remain an important feature of the German travel market. The majority of our hotels traded restriction-free for the first time this year, so still have some way to go before they reach their full potential. However, we are encouraged by the performance of our cohort of 18 established hotels, which are achieving great guest scores and are trading in line with the wider mid-scale and economy sector. I'll now turn to the segmental highlights, starting with the UK. As I outlined earlier, market demand was strong and UK accommodation sales were well ahead of last year and pre-pandemic levels. The growth in our estate and inflationary pressures drove higher operating costs.
Our operational leverage increased pre-tax margins considerably to 19.6%. Adjusted profit before tax went up to 19% versus pre-pandemic levels to GBP 492 million. In Germany, we've also made great progress. The growth in our estate and the absence of restrictions from the second quarter onwards meant that statutory revenues increased significantly, both versus last year and pre-pandemic levels. We now have 51 hotels and just over 9,000 rooms open, including the 6 hotels we acquired at the end of the financial year. The result was a loss before tax of GBP 50 million that was within our guided range. Our strong trading performance delivered operating cash flow of GBP 719 million, a significant uplift versus last year, and was more than sufficient to fund our continued program of investment and increased dividends.
Our full-year CapEx spend was GBP 546 million and included three freehold purchases, two in London and one in Dublin, our ongoing refurbishment and maintenance program, as well as a number of strategic IT projects. We are always looking to optimize our estate when suitable opportunities arise to maximize returns. In the year, we received disposal proceeds of GBP 60 million. The net result was a total cash flow before shareholder returns of GBP 150 million. We followed last year's final dividend of GBP 70 million with an interim dividend of GBP 49 million at the half year, resulting in a net cash inflow of GBP 31 million and a net cash position at the year-end of GBP 171 million.
On the back of our performance in FY23, strong current trading, a positive outlook, and a healthy net cash position, we've applied our capital allocation framework as planned. Our balance sheet strength means we can continue to invest with confidence, even during periods of macroeconomic uncertainty. We opened over 4,000 rooms across the UK and Germany this year, which is reflected in the growth of property, plant, and equipment, right-of-use assets, and lease liabilities. At the year-end, approximately 54% of the group's hotels were freehold, with the remaining 46% operated as leaseholds, a mix which differentiates us from many of our competitors. A significant freehold estate also provides us with a number of operational and financial advantages, including a strong financial covenant and a flexible source of funding.
For example, included within the GBP 60 million of disposal on the previous slide were the proceeds from the sale and leaseback of a property in Marylebone, London. We reaffirmed our investment-grade status in the first half. Since then, our Funds from Operations to Lease-Adjusted Net Debt Ratio has reduced to 2.7 times at the year-end, well within our leverage target of 3.7 times. The strength of our covenant makes us a highly attractive partner when being considered for leasehold and other transactions, both in the UK and Germany. The strength of our balance sheet means we also have the flexibility to purchase attractive freeholds and execute bolt-on M&A in Germany. Our strong financial performance, positive outlook, a healthy net cash position means we now have surplus capital on the balance sheet, which I'll address now.
At our interim results in October, I introduced our capital allocation framework. As a reminder, our priorities under the framework are, first, maintain our investment-grade leverage metrics. Second, continue to invest in our estates in the UK and Germany, in IT projects, and in maintenance of our estate, all while maintaining our strong returns profile. Third, maintain the flexibility to undertake M&A opportunities where they meet our strict investment criteria. Fourth, continue to grow our dividends in line with earnings. Lastly, dependent on outlook, return excess capital to shareholders. As a result of our strong performance and positive outlook, we are announcing a GBP 300 million share buyback to be completed through our brokers during the first half of FY24.
Future returns will be subject to the group's financial performance, the trading outlook, and the availability of high returning investment opportunities, and we will continue to review this on a regular basis. We're also recommending a final dividend of 49.8 pence, resulting in a payment of GBP 100 million, making a total dividend for the year of 74.2 pence and a total payment of GBP 149 million. The strength of our trading performance led to increased UK returns and generated strong cash flow. We invested over GBP 500 million back into the business and are returning over GBP 400 million to shareholders. Turning to the outlook. We remain confident in our ability to maintain our momentum into FY24, despite an uncertain macroeconomic environment.
Our strong current trading, supported by the decline in the independent hotel sector, underpins the robust demand we are experiencing. Our vertically integrated operating model also gives us proven resilience in the event of any downturn, as evidenced in past recessions. On pricing, we remain confident in being able to continue to improve yield with a number of levers at our disposal. Premier Inn is the U.K.'s number one hotel brand, synonymous with high quality and great value, allowing us to leverage our brand to increase customer loyalty while reducing our acquisition costs. Our proprietary dynamic trading engine means we can flex both our pricing and digital marketing spend in response to changes in demand. This gives us a real competitive edge, as evidenced by our RevPAR premium. A number of our commercial initiatives, such as new room types and flexible pricing options, are also driving average room rates.
Finally, on efficiencies, we have over 840 hotels and 800 restaurants across the UK. This scale means we can pool labor within hotel catchments and drive additional operational efficiencies that are not available to others. We've delivered significant cost efficiencies over many years, driven by process improvements and procurement opportunities. As FY23 was largely unaffected by pandemic related restrictions, we are returning to providing year-on-year guidance for FY24. I also wanted to update our drop-through guidance for the UK and Germany. Our view of inflation for the current year is unchanged at between 7% and 8%. With a strong pricing environment, we remain confident in being able to deliver sufficient like-for-like sales growth together with our efficiencies and new room growth to at least maintain UK profits.
In Germany, we are still expecting a pre-tax loss of between GBP 20 million and GBP 30 million, plus an additional GBP 10 million loss owing to the conversion of the 900 rooms we acquired at the end of FY23. Having completed some large freehold purchases last year, we expect CapEx to be between GBP 400 million and GBP 450 million, you should be working on the assumption that interest receivable on our cash balances will be in line with Bank of England rates. We're expecting to add between 1,500 and 2,000 rooms in the UK during FY24 and 1,000 to 1,500 in Germany. I'm also revising our unit cost guidance for our new capacity in the UK and for our total German estate.
As you can see, there have been several changes versus previous guidance, largely reflecting the impact of inflation and the mix of our pipeline. I'll now turn to current trading. During the first 7 weeks of this year, hotel demand in the UK has remained strong with accommodation sales up over 15% versus last year, representing a continued RevPAR premium versus the market. Our forward booked occupancy position remains in line with last year, but at much higher average room rates with a result that we expect revenue to continue to grow. In Germany, market demand has rebounded following a softer Q4. We are continuing to make good progress with our 18 established hotels that are performing in line with the market.
With strong current trading, a healthy balance sheet, significant structural growth opportunities in both the UK and Germany, and an ongoing program of cost efficiencies, we remain confident in the outlook for the current year. 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 on the reasons underpinning our confidence in being able to continue to deliver long-term growth and attractive returns for our shareholders. As I mentioned earlier, our vertically integrated operating model is the key driver of our performance and differentiates us from many of our peers. It has meant we have been able to, one, secure clear market leadership in the UK, putting our hotels in the best locations and using the right format to maximize returns. Two, match our brand promise and deliver a consistent high quality offer at a great price. Three, we own the relationship with our guests through our direct distribution, which reduces costs. Four, we integrate our proprietary trading engine with our digital marketing capabilities, driving higher occupancy and higher yields.
5, we attract and retain the best people to manage our operations and deliver a fantastic guest experience. 6, we enhance our customer proposition with a great food and beverage offering. 7, we leverage our property expertise to capture development profits and optimize our freehold estate. Finally, we invest in our industry-leading sustainability program, ensuring that we operate responsibly, which is vital for our long-term growth. Our model is a real source of competitive advantage, one that is extremely difficult to replicate. With such a powerful and differentiated model at our disposal, there are a number of opportunities for us to deliver profitable growth. I'll start with the U.K., looking at overall market supply. We completed our detailed network planning exercise at the end of last year.
Prior to the pandemic, we knew that the independent hotel sector contracted by around 12% over the 9 years between 2010 and 2019. This rate of decline accelerated over the last few years, largely as a result of the pandemic. This reduced total hotel supply, which is now back to where it was in 2013. I'll say that again: U.K. hotel supply is now back to where it was in 2013. This is hugely significant, and we think represents a major structural shift in the hotel cycle. It has created a favorable market backdrop into which, thanks to our model, we can continue to grow. Even for those independents that have come through the pandemic, labor shortages and cost inflation may prompt further declines, and we expect total hotel supply to remain below 2019 levels until at least 2026.
How we plan to take advantage of this is covered on the next slide. At the end of full year FY23, we had over 83,500 rooms across 847 hotels, confirming our position as the U.K.'s largest hotel chain. We opened over 1,700 new rooms across the U.K. estate. We have over 7,000 rooms in our committed pipeline. What this means in practice is that we now have more great quality hotels in more locations than ever before, and so we're better able to meet the demands of our customers. The reduction in market supply, combined with projected strong demand, has created an opportunity for us to increase our potential footprint from 110,000-125,000 rooms.
Our confidence in being able to fill this capacity at attractive rates is underpinned by our record levels of occupancy, averaging 83% in full year 2023. We are also optimizing our existing estate to maximize revenues and returns from individual catchments. On the right-hand side of this slide, we show an example of how we've been able to optimize our estate in Peterborough, where we've increased catchment revenue and overall levels of return by opening bigger, more efficient hotels and closing smaller, less profitable ones. With freehold sites, we have the ability to meet our catchment room targets by extending high occupancy freehold hotels. We can only drive these incremental returns if we attract enough customers in the first place, and so our customer proposition has to be right and it has to be better than the competition.
This is an update to a slide you have seen many times before. In fact, we've been giving you this data for many years. Of all the slides you've seen today, this slide and the slide on market supply are arguably the most important. Here, we highlight the wedge that we have driven between us and our competitors, and the clear blue water that now exists in terms of quality and value. It underpins our confidence in being able to continue to drive our business model to deliver profitable growth and attractive long-term returns. Premier Inn is and remains the U.K.'s number one hotel brand, synonymous with high quality and great value. We are the clear market leader on this combined measure, and it's why 75% of our bookings are made by guests who have stayed with us before.
Whether traveling for work or for pleasure, our customers come back to us because of the quality and the value of our offer, which is simply the best in the market. Sustaining this position is not easy. It requires continued investment in our proposition and also our teams, without whom we would be unable to deliver a great service to our guests. We have a number of commercial levers that we are also using to drive additional revenue growth. Premier Inn's U.K. customer base is broad, and despite having grown U.K. accommodation sales by 37% versus pre-pandemic years, we have maintained a very well-balanced split between business and leisure. As a result, we are not overexposed to any one type of customer, and we are better placed to maximize occupancy.
We are focused on capturing domestic travelers and are not dependent on international travel that represents around 7% of accommodation sales. Business customers tend to drive higher RevPARs and travel more frequently than leisure guests. We're continuing to enhance our business proposition through 3 core channels. Firstly, Business Account allows corporate customers to book using credit provided by a third party, and is proving popular with new account sign-ups having increased significantly since full year 2020. Second, our Business Booker portal is free to join and provides corporates with a guaranteed discount of up to 15% off our headline flex rate, which now represents an increasing proportion of sales.
The chart on the right shows our momentum in acquiring Business Booker accounts that represent 8% of U.K. accommodation sales. Finally, we have enhanced our relationships with travel management companies, which also account for 8% of U.K. accommodation sales. These relationships give us access to customers that previously would not have been able to book or stay at Premier Inn, and we believe can help drive additional revenue growth. We are immensely proud of our reputation for quality and value, but we also recognize the need to continue to drive large volumes of customers to our website and other channels through highly effective marketing. Our brand marketing, including our latest Rest Easy campaign, is a powerful tool in driving bookings, reducing customer acquisition costs, and sustaining our market-leading brand awareness scores.
We also use highly targeted digital marketing to help maximize occupancy and yield while still maintaining a healthy mix of both business versus leisure and short versus long lead sales. The chart on the right-hand side illustrates the power of our proprietary trading model that manages all of our pricing strategies across the U.K. As we developed it in-house, we are able to respond quickly to changing market dynamics, opening up new opportunities to extract additional RevPAR. The chart shows a circa 80% increase in the total number of site nights with 100% occupancy versus full year 2020, with 52% of all site nights being full in full year 2023. This has helped to drive a 17% increase in average room rates.
As I mentioned earlier, we are continuing to invest in our customer proposition so that we stay ahead of the market and continue to drive efficiencies. The latest iteration of our Premier Inn standard room, ID5, is in test and is delivering higher guest scores than our previous standard room type. It will also allow us to extract more operational savings by reducing cleaning time. Our innovative Hub hotel concept broadens our customer appeal and upgraded room concepts like Premier Plus are proving popular at a modest premium to our standard room rate. We continue to invest in our I.T. platforms and infrastructure, enhancing our digital capability and providing future opportunities for additional revenue growth and cost savings. Our food and beverage proposition remains important to our customer offer, helping to drive higher RevPAR in our hotels.
While F&B revenue remained behind pre-pandemic levels, recent trading has been more encouraging, and we are continuing to work on improving our performance. Let's now turn to Germany and an update on our progress towards capturing what we see as a significant source of value for the group. On the left-hand side of this slide is a reminder of why we think the German market is highly attractive. Germany is 40% bigger than the U.K. RevPAR growth has been higher than the U.K. There are fewer real estate investment trusts, meaning that owner-operators like Premier Inn are better placed to expand through acquiring, leasing, converting, or building new hotels. There is scope for M&A, and there is a similar structural opportunity to that in the U.K. Germany has a large independent hotel sector that is in decline.
As indicated on the right of this slide, we believe that the share held by independents has fallen by around 5 percentage points to approximately 67%. Following the pandemic, now that government support has ended, with rising inflation and interest rates, we expect that the independent hotel sector in Germany will remain under pressure, creating further opportunities for market share gains. As a result, while we remain some way behind our competitors today, we are closing the gap and have been expanding at a much faster rate. A summary of the current competitive landscape is shown on the next slide. We've already made a significant investment in the German market, as you can see on this slide, and are committed to becoming the number one budget brand. We now have 9,000 rooms open and a further 7,000 rooms in the committed pipeline.
We plan to grow our estate through organic growth and bolt-on M&A with our latest acquisition of 6 hotels, including a freehold site in Austria, having completed at the end of full year 2023. Our strategy in Germany is clear: to reach scale, replicate our UK model, and deliver attractive rates of return. With 51 hotels now open and a growing customer base, we are driving greater guest volumes by leveraging our digital marketing capabilities, and we are attracting more corporate customers through our focus on business channels. We are continuing to tailor our customer offer for localized preferences, such as providing more continental breakfast choices and new payment methods, as well as refining our operating model, all of which will drive our financial performance.
We still have some way to go, but we are making good progress and remain on course to achieve our target level of return, as covered on the next slide. Here you can see an update on the performance of our cohort of 18 established hotels that reach profitability in FY23. On the right-hand side, we have an example of one of these hotels in Hamburg. It opened in February 2019 and is a freehold site upon which we built a brand-new hotel. It is achieving high guest scores, high occupancy, and strong room rates, underpinning our confidence that we can replicate our UK model in Germany, and that we can reach similar levels of return of between 10%-14%. Across the entire business, delivering material cost efficiencies year after year is a key area of focus.
Our teams continue to seek new and innovative ways of working to both improve the service to our guests and to drive savings through labor management, procurement improvements, and better supplier relationships. With heightened inflationary pressures, such initiatives are more important than ever. We remain on track to deliver GBP 140 million of targeted savings between FY22 and FY25. As I've already mentioned, our teams really are at the heart of our business. They deliver an outstanding experience for our guests and are key to our long-term success. We therefore work incredibly hard to safeguard their mental, physical, and financial well-being, in addition to helping them develop their careers here at Whitbread.
By investing in team member pay, reward, development, and well-being, we have seen high levels of engagement, an increase in average tenure, and a sustained quality experience for our guests. In other words, looking after our people is not just the right thing to do, it also makes good business sense. Finally, I want to update you on the latest developments regarding our industry-leading Force for Good program. As you know, we have three pillars that are embedded across our business. We have made strong progress against our stretching Scope 1 and 2 carbon targets. We've also reduced our Scope 3 intensity by circa 28%, set a new water reduction target, and had some great external recognition for our work on diversity and inclusion.
We've also now allocated GBP 504 million of our green bond proceeds, and continue to improve our assessment of the risks and opportunities from climate change through our TCFD reporting. For more detailed information on our progress, please see our latest ESG report that will soon be available via our website. Let me now turn to my concluding slide and perhaps take a step back to look at the bigger picture. There has been a significant structural shift in the hotel market, one that plays to the strengths of our differentiating model, as evidenced by our latest results. Our current trading has been strong with encouraging lead indicators, giving us real momentum into full year 2024. That together with a structural shift in the market underpins our confidence in the outlook for this year.
Looking further ahead, we have significant scope to continue to grow in the UK and have real confidence in replicating our UK model in Germany. That confidence means we have recommended an increased final dividend as well as announced an initial GBP 300 million share buyback. We are in great shape, trading well, and have some really exciting prospects ahead. Thank you for joining us this morning. Hemant and I will host a Q&A session starting at 9:15 A.M. UK 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.