The owner of Premier Inn, Whitbread, has issued a stark warning that it faces a significant financial blow due to recent government policy changes, highlighting wider turmoil in the UK's hospitality sector.
A Multi-Million Pound Budget Impact
Whitbread has cautioned that it will face a hit of roughly £35 million linked to alterations in business rates announced in the Labour Party's Autumn Budget. This revised figure comes after an initial estimate, made shortly after the budget, projected an annual impact of between £40 million and £50 million from the 2027 financial year.
The company delivered this updated assessment alongside its third-quarter trading update. It revealed that group sales rose by 2% to £781 million in the three months to November 27, driven by growth in its UK and German Premier Inn businesses. In the UK, total accommodation sales grew by 2%, with revenue per available room rising by 3%.
Broader Sector Crisis and Strategic Shifts
This corporate tax warning coincides with a dire forecast from the trade body UK Hospitality, which suggests that more than 2,000 hospitality businesses could close this year. A detailed breakdown of this figure reveals that 574 hotels are at risk of closing, alongside 540 pubs and 293 restaurants.
Dominic Paul, Whitbread's chief executive, commented on the company's performance: “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.”
In response to economic pressures, Whitbread is pushing ahead with a major restructuring plan launched in 2024, which previously saw around 1,500 jobs cut. The company now expects to secure between £75 million and £80 million in savings this year across labour, technology, and procurement, exceeding earlier targets.
Restructuring and Future Plans
A key part of Whitbread's strategy involves a significant shift in its property portfolio. The group is reducing its branded restaurant estate by approximately 200 sites, a move intended to free up capital and space to build more hotel rooms for its core Premier Inn brand.
Despite the looming tax burden, the company reported that trading momentum has continued into the new year, with both UK accommodation sales and revenue per available room rising by 3% in the six weeks to January 8. This ongoing restructuring and cost-saving drive underscores the challenging landscape for major hospitality operators navigating post-budget fiscal changes and broader sector instability.
