Premier Inn owner Whitbread delivered a strong start to its financial year, reporting 2% growth in group sales to £727m as trading improved across both its UK and German hotel operations.

Premier Inn UK recorded 3% growth in accommodation sales and a 2% increase in revenue per available room (RevPAR) in Q1 FY27, continuing to outperform the wider midscale and economy market. London led performance, with accommodation sales rising 7% and RevPAR up 4%, while regional trading also remained positive.

In the German market, Premier Inn Germany continued its expansion momentum, delivering accommodation sales growth of 13% in local currency, supported by stronger demand and the opening of six new hotels.

Food and beverage sales in the UK declined 5%, but that comes amid Whitbread’s ongoing strategy whereby some of its food and drink spaces situated alongside accommodation are being converted to more hotel rooms. The company is looking to exit from all remaining branded restaurants and transition towards becoming a pure-play hotel operator.

Whitbread said leisure bookings remain ahead of last year, supporting confidence in its full-year outlook as it progresses its new five-year plan focused on higher returns, lower capital intensity and increased free cash flow.

“Whilst we expect the impact of business rates to remain in line with our previous FY27 guidance, we are continuing to press the UK Government for changes to FY28 and FY29," said Dominic Paul, CEO at Whitbread.

"With a favourable supply environment in the UK and Germany, we are focused on driving our best-in-class commercial and efficiencies programmes whilst at the same time reducing our capital intensity by £1bn, a combination that will increase margins and returns and generate £2bn of free cash flow available for shareholders by FY31."

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