What’s going on with the Whitbread share price?

Since the beginning of the year, the Toasted bread (LSE: WTB) share price has risen. And it’s up about 20% since the market reopened after Christmas.

But those gains may not help long-term shareholders move forward. Over the past year, it has increased by around 4%. And stocks fell to lower levels for most of 2022.

A large hotel chain

The hospitality business owns the Premier Inn hotel chain and is expanding operations in the UK and Germany. But the pandemic hampered operational progress. And the situation underscores the cyclical nature of business and its vulnerability to general economic downturns.

However, Whitbread has been saying for some time that the recovery and growth of its operations has been good. In fact, throughout the year 2022 every trading update states that the business is outperforming the sector.

But it looks like investors are finally getting the message this year. And the bullish third-quarter trading update released on January 12 appears to have pushed the share price higher.

The outgoing chief executive, Alison Brittain, said in an update that Premier Inn sent a “strong”performance in the second quarter in England and Germany. Indeed, overall like-for-like sales for accommodation grew by nearly 23% year-on-year. And when compared to the pre-pandemic trading year up to March 2020, sales are almost 27% higher.

A bullish outlook

Looking ahead, the company said it has “support” forward-ordered positions in the UK. And directors expect prices to remain strong. Meanwhile, there are plans to expand the estate. And they are “confident” in prospect for British and German operations.

But there will be a new chief executive to steer the company through its next phase of growth. Dominic Paul officially joined the board on January 17th. And my prediction is that the appointment of new blood at the top of the organization could be a factor that increases the strength of the share price this year.

I am a fan of periodic changes in the management team. But only after the director has served for a decent amount of time. And Alison Brittain was in charge for around seven years – which is long enough to hold a high-pressure position.

Renewed drive and ambition?

I think a new leader can bring new energy, drive and ambition. Most top managers want to make their mark by scoring recognizable achievements and driving the business forward. So, the appointment of a new chief executive here could be good for shareholders.

Meanwhile, City analysts are predicting a low single-digit percentage increase for the trading year to March 2024, and a good double dividend increase. But adjusted against these expectations, the anticipated dividend yield is only around 2.1%. And the forward price-to-earnings ratio is almost 22. That’s not cheap.

I am interested in following the underlying growth story here. But the stock is not an obvious buy for me right now.