Premier Inn owner Whitbread set for lower-than-expected business rates hit
The hospitality group expects an impact of around £35 million a year, having previously said this could be up to £50 million.
Premier Inn owner Whitbread has cautioned it will face a roughly £35 million hit linked to business rates changes from the budget, in a reduction from previous warnings.
However, the hospitality giant stressed the tax changes announced in November’s autumn budget are still “damaging” for the industry and is pressing the Government to change its policy.
It came as the company reported “strong” recent trading momentum and improved cost savings across its operations.
The firm, 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 UK commercial properties – come into force in April.
Businesses in the sector saw the Government reduce its multiplier for bills but many saw this more than offset by the phasing out of a current 40% discount and new property valuations, which have resulted in particular increases for hotels and pubs.
Shortly after the autumn budget, the group said it expected an annual impact of between £40 million and £50 million from the 2027 financial year.
However, on Tuesday Whitbread said this is now expected to be around £35 million.
Whitbread also told shareholders that it is on track to secure more cost efficiencies this financial year than previously expected.
It expects to secure between £75 million and £80 million in savings for the year across labour, technology and procurement, having previously guided to between £65 million and £70 million.
It comes as the group continues to push ahead with a major restructuring launched in 2024, which saw the group cut around 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% to £781 million 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% in the UK, with a 3% rise in revenue per available room.
It said these have both risen by 3% in the six weeks to January 8.
Dominic Paul, Whitbread chief executive, 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.”
