Jeremy Warner's Outlook: Whitbread: bucking the slowdown?

Consumer slowdown? What consumer slowdown? There's little evidence of it in the four divisions that make up Whitbread – Premier Inns, Costa Coffee, and the pubs and restaurants chains of the Brewers Fayre and Beefeater. All of these businesses are under margin pressure because of rising food and energy prices, but sales are continuing to boom.

In the 13 weeks to the end of last month, like-for-like sales at Premier Inns were up 10.7 per cent, at pubs and restaurants by 3.6 per cent, and at Costa by 6 per cent, to give a group total of 7.1 per cent. Even in boom times, this would be an impressive performance.

Alan Parker, the chief executive, is not such a fool as to think it will continue, even if there are a number of things working in his favour, slowdown or no slowdown. Premier Inns in particular has hit on a winning formula which is capturing growing numbers of business clients alongside the leisure market as they trade down from the mid-market chains.

Fortunately, there is not much below Premier in the budget category that could be called reliable, so the chain can price as aggressively as it likes. Yet ultimately, no consumer-facing business is going to be completely recession-proof. Those that believe they are will be in for a rude awakening.

Leisure has so far been comparatively immune to the downturn hitting the the high street, yet, if experience in the US is anything to go by, it won't last. Hotel occupancy across the board in the US is sharply down on a year ago. There is every reason to believe the same trends will eventually assert themselves here.

The same is true of Starbucks, which recently reported a big fall in like-for-like sales. The Costa cappuccino and stale croissant may be the last thing to go, but go they eventually will once consumers hit full belt-tightening mode.

As the pound weakens and the labour market contracts, the flow of migrant labour from eastern Europe is reversing. This provides a useful buffer against rising unemployment, but it may also hit demand in the UK quite badly. Eastern Europeans don't repatriate all their earnings.

Some businesses continue to express bemusement over the gloom and doom they read about in the newspapers. Like Whitbread, they haven't yet felt it. But even if the outlook isn't quite as bad as the growing ranks of doomsters suggest, virtually all businesses are facing a very challenging couple of years.

One indicator which in the past has proved a devastatingly accurate harbinger of bad times to come is advertising spending. Until recently, it was holding up quite well.

Yet as Roger Parry, speaking in his role as chairman of the UK advertising agency Media Square, observed last week, it is now tanking. "The level to which confidence has fallen is really scary", he said. For those of us who work in the media, scary is the word for it. The only consolation is that we are unlikely to be alone for long. Even Costa and Premier Inns cannot remain immune to the fast-encroaching cold front.