A day after Punch Taverns’s surprise dividend cut destroyed investor sentiment on the leisure sector, Whitbread’s second-quarter trading update did its level best to restore it.

Shares in the owner of Premier Inn and Costa Coffee gained nearly 4 per cent after the company reported a 7 per cent advance in like-for-like sales — maintaining the resilience it showed in the first quarter.

Once again, it was Premier Inn that stood out, with a 10.2 per cent rise in like-for-likes providing further evidence that tougher times are prompting business travellers to seek out more modest lodgings. Its pub restaurant division, comprising the made-over Brewers Fayre chain, also fared well, with sales strengthening on the quarter.

The only sign of weakness came at Costa, where, like Starbucks before it, the coffee chain is feeling the effect of a consumer slowdown. The extent of the second-quarter slide in sales, from a 6 per cent advance to just 1 per cent in the past 11 weeks, is mitigated by strong year-on-year comparisons — they were up 10 per cent this time last year. It is also much as expected.

The comfort is that Costa can only do limited damage: it is Whitbread’s smallest division. Conversely, Premier is its biggest, accounting for over 70 per cent of profits.

With low gearing, strong cashflow and a vigorous five-year expansion plan still on track, Whitbread, at 12 times current year earnings, remains, like a budget hotel, a good place to shelter in turbulent times. Hold.

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