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Why I am bullish on this hospitality stock

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It has been a difficult time lately for all hospitality stocks, and this includes Whitbread (LSE:WTB), the owner of a number of restaurant brands and the Premier Inn chain of hotels.

There have been recent job losses of around 1,500 in the company (although far less than the 6,000 initially mentioned) and the dividend was suspended last year.

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Investing in any hospitality business at the moment comes with some risk. Any further lockdown and restrictions in movement would be terrible for an already massively disrupted industry.

It is not just the Premier Inn hotel chain that has been affected by loss of business, as Whitbread also operates a number of restaurants with brands such as Beefeater and Brewers Fayre, all of which have suffered with periods of closure and loss of custom due to the pandemic.

Despite these negative points, I do believe that the business appears to be in a better position than many of the other leisure and hospitality stocks.

There are plans for future growth, with the decision to build more Premier Inn hotels in a number of locations across the United Kingdom. The company also have an increasing number of hotels opening in Germany.

Once lockdown restrictions are eventually lifted and movement allowed, it is possible that there could be pent-up demand from those who wish to stay overnight in hotels and use restaurants.

There is also the possibility of an increase in staycations for 2021 if some international restrictions on travel were to remain in place. This could be a boost for Whitbread as most of its businesses are located in the United Kingdom.

It is also interesting that the company has recently announced that it is issuing green bonds, money from which will be used to support sustainable projects including the introduction of electric vehicle charge points. Therefore the management do seem to be forward thinking.

Whitbread has also recently taken measures to try and shore up finances, including negotiating an extension of revolving credit facilities and confirmation that it will repay forthcoming maturing debts of approximately £284 million.

Even if demand increases for this year, the reality is that it may take some time to return to pre-pandemic levels for hotel and restaurant bookings. Therefore I would need to look at this stock as a longer-term investment.

The current share price, which at the time of writing is around 3,200p per share, is still below the price of over 4,000p per share back in February 2020, just before the pandemic took hold in the UK.

I certainly feel more bullish with Whitbread than some of the other leisure and hospitality stocks such as Cineworld Group.

I would therefore consider adding Whitbread to my own portfolio and hold for longer-term growth.

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Tim Charles has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.