Fitch upgrades Whitbread

Fitch Ratings said it upgraded Whitbread plc's long-term issuer default rating and senior unsecured instrument ratings to BBB from BBB-.

“The upgrade reflects our expectation that Whitbread's conservative leverage and strong operating performance will be sustained over the next three years, despite a likely mild recession in its core U.K. market. This is supported by robust financial flexibility and its commitment to maintain leverage in line with our sensitivities for a BBB rating. We expect Whitbread to protect its credit ratios following its capital allocation framework, should demand weaken more than we currently assume,” the agency said in a press release.

Fitch noted Whitbread's revenue climbed by double digits in the fiscal year ending February 2023 (FY23) and the first quarter of FY24.

“Whitbread's lead indicators have not shown any weakening in consumer demand so far, but we believe that revenue growth will start decelerating from 2QFY24. Nevertheless, we do not expect significant pressure on leisure and travel spend as our current economic outlook suggests U.K. GDP will shrink by just 0.1% in 2023 and employment levels will remain healthy,” Fitch said.

The outlook is stable.

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