Whitbread has lowered the expected cost impact from the proposed business rate changes in the recent Autumn Budget, from a range of between £40m and £50m to around £35m, in its 2027 financial year.

While the hospitality firm, which owns the Premier Inn and Beefeater brands, has dropped these expectations, it believes the proposed changes to business rates are "damaging for the overall sector" and will impact future investment and job creation.

In its Q3 trading update, Whitbread’s total group sales were up 2% year-on-year to £781m, with positive total accommodation sales performance in both its UK and German divisions.

However, this was partially offset by an expected reduction in UK food and beverage sales as a result of its accelerating growth plan (AGP) to transform some of its lower returning branded restaurants into higher returning hotel extensions.

The latest update also comes after Whitbread sold nine of its hotels to LondonMetric for £89m.

Chief executive at Whitbread, Dominic Paul, said: "In the UK, the overall market continued its return to growth and we delivered a positive RevPAR performance, which has continued and stepped up in the current trading period. The structural shift in supply, together with our brand strength and commercial programme, means we are confident in our ability to maintain a healthy RevPAR premium versus the market.

"In Germany, demand has increased and we outperformed the wider market in what is an important trading period with a number of key events. We remain confident in reaching profitability this year, which is a key milestone as we progress towards fulfilling our ambition of becoming the country's number one hotel brand."

Looking ahead, Whitbread stated that it has continued to make "great progress" against its key initiatives and will deliver a higher level of efficiencies in the 2026 financial year than previously expected, with its range increasing from between £65m and £70m to £75m and £80m.

Whitbread expects to complete a £250m share buyback on 30 April, with 7.7 million shares purchased so far for a consideration of approximately £217m.

Following its latest update, shares in the hospitality firm jumped by almost 5%, after dropping by over 11% in the last six months.

Head of equity research at Hargreaves Lansdown, Derren Nathan, stated that the latest update may abate shareholders’ anxieties for the time being.

He concluded: "Whitbread’s shares have been under pressure, with investors questioning the company’s ability to absorb the impact of business rate rises following Rachel Reeves’ November Budget. Larger premises, such as Premier Inn’s hotels, have been the hardest hit. Today’s Q3 statement should provide some relief for investors, with demand accelerating in both the core UK and fledgling German operations.

"On the cost side, the group’s estimate of the next financial year’s business rate impact has been reduced below the previous range of £40m-£50m to £35m and the group is now set to drive greater-than-planned cost efficiencies this year. It’s also playing its part in the growing clamour by the hospitality industry for more supportive government policy. Whether this is enough to keep activist shareholder Corvax happy remains to be seen."

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