Premier Inn owner Whitbread flags revised £35 million business rates hit: shares jump

However, the hospitality giant stressed the tax changes announced in Chancellor Rachel Reeves’ fiscal statement in November were still “damaging” for the industry and is pressing the UK government to change its policy.

The warning came as the group reported “strong” recent trading momentum and improved cost savings across its operations.

Whitbread, which also owns brands including Beefeater and Brewers Fayre, is among hospitality groups facing higher tax bills when changes to business rates - the tax on commercial properties - come into force in April.

Shortly after the autumn Budget, the group said it expected an annual impact of between £40m and £50m from the 2027 financial year. However, on Tuesday Whitbread said this is now expected to be in the region of £35m. The Premier Inn owner also told shareholders that it is on track to secure more cost efficiencies this financial year than previously expected.

It expects to secure between £75m and £80m in savings for the year across labour, technology and procurement, having previously guided to between £65m and £70m.

The group is continuing to push ahead with a major restructuring launched in 2024, which saw it cut some 1,500 jobs. Whitbread is reducing the size of its branded restaurant business by around 200 sites in favour of building more hotel rooms.

In its latest update, Whitbread said group sales rose by 2 per cent to £781m in the three months to November 27, driven by growth in its Premier Inn businesses in the UK and Germany. Total accommodation sales grew by 2 per cent in the UK, with a 3 per cent rise in revenue per available room. It added that both of those measures have risen by 3 per cent in the six weeks to January 8.

Chief executive Dominic Paul said: “We delivered a strong performance in the third quarter, with positive momentum across the business. We remain highly disciplined regarding our strategic actions and by focusing on what we can control, we have continued to make great progress against our key initiatives and will deliver a higher level of efficiencies in full-year 2026 than previously expected.”

Richard Hunter, head of markets at investment platform Interactive Investor, said: “It remains to be seen whether there is any kind of government backtrack from the additional pressure wrought on the hospitality sector through increased business rates.

“When announced at the autumn Budget, Whitbread shares slumped after the group estimated an additional hit of £40m to £50m, leading to between 7 per cent and 8 per cent inflation on its cost base, although that figure has today been reduced slightly to £35m.”

Chris Beauchamp, chief market analyst UK at investing and trading platform IG, noted: “Whitbread continues to claw its way higher from the December nadir, and today’s numbers suggest there could be more upside to come.”

Shares were up about 5 per cent in Tuesday morning trading.

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