Hospitality group Whitbread has completed a significant £89 million property deal, selling nine of its Premier Inn hotels to real estate investment firm Londonmetric Property. The transaction forms a key part of Whitbread's broader strategy to redeploy between £250 million and £300 million of capital from property sales into its expansion plans.
Details of the Hotel Portfolio Sale
The nine hotels sold are all located within Whitbread's South East cluster, with sites stretching from Poole and Southampton Airport up to Warwick. Despite the change in ownership, Whitbread will retain full operational control of the Premier Inn locations under a 30-year leaseback agreement secured as part of the sale.
This latest deal follows a previous £44 million purchase by Londonmetric from Whitbread, bringing the property firm's total Premier Inn portfolio to 22 sites. The arrangement now makes Whitbread Londonmetric's fourth-largest tenant, generating £11.3 million in annual rent and accounting for 2.7% of Londonmetric's total rental income.
Strategic Moves and Financial Performance
The capital raised from this and other disposals is earmarked for Whitbread's ongoing expansion and transformation initiatives. A central pillar of this strategy involves converting its owned restaurant brands, like Beefeater, into additional hotel accommodation.
This shift is reflected in the company's recent trading update. For the latest quarter, Whitbread reported total group sales of £781 million, a 2% increase. This was driven by robust accommodation performance in both the UK and Germany, though UK food and beverage revenues declined as the restaurant conversion programme progressed.
- UK accommodation sales rose 2%, with revenue per available room holding a £5.63 premium over the market.
- In Germany, accommodation sales surged 12% in local currency, with revenue per available room up 7% to €76.
Furthermore, Whitbread has increased its target for cost savings across workforce, technology, and procurement to £75 million-£80 million, up from £65 million-£70 million. The company is also on course to complete a £250 million share buyback by 30 April 2026, having already bought back £217 million worth of shares.
Navigating Business Rates and Investor Sentiment
Whitbread's share price has faced pressure following the November 2025 Budget, primarily due to investor concerns over rising business rates. Chief Executive Dominic Paul provided updated guidance, stating the group now expects the financial impact of business rates to reach £35 million in the 2027 financial year. This is below the initial projection of £40 million-£50 million.
Despite the revised forecast, Paul strongly criticised the policy. "We continue to believe the proposed changes to business rates are damaging for the overall sector and will impact future investment and job creation," he said, adding that Whitbread is lobbying the government alongside the wider hospitality industry.
In response to the Autumn Budget, the company is exploring additional strategies to boost profits and margins beyond its restaurant conversion plan. The market reacted positively to the quarterly update, with Whitbread's shares jumping over 4% in morning trading on the day of the announcement.
Derren Nathan, head of equity research at Hargreaves Lansdown, noted: "Today's Q3 statement should provide some relief for investors, with demand accelerating in both the core UK and fledgling German operations." He added that Whitbread is adding its voice to the industry's call for more supportive government policy.
