Premier Inn owner eyes cuts to tackle £50m business rates rise

Premier Inn owner Whitbread said it expects its business rates bill to rise by between £40m and £50m in its next financial year due to changes announced in the Budget.

The group, which owns around 850 UK hotels, said it would look to cut costs by £60m to deal with the impact.

A “variety of options” to drive profits, margins and returns will be explored over the next few months, Whitbread said.

“We are extremely disappointed with the outcome of this week’s UK Budget which will have a significant impact on our business and the wider hospitality industry,” said Whitbread chief executive Dominic Paul.

The chancellor has confirmed plans to introduce permanently lower tax rates for more than 750,000 retail, hospitality and leisure properties in England from 2026/27. However, hospitality properties worth in excess of £500,000 will now face a higher multiplier.

Whitbread said there would be a “significant increase” in the rateable values for many of its hotels, driving up its business rates bill.

It estimated the Budget would mean it would see gross UK cost inflation of between 7% and 8% on its £1.7b cost base. However, net cost inflation is expected to fall to between 3.5% and 4.5% if it can find £60m in savings.

Whitbread said it had returned to growth in the third quarter of 2025 with positive growth in revenue per available room (revpar) and forward bookings tracking ahead of last year.

In Germany, where the group operates around 62 Premier Inn hotels, Paul said demand had increased during the third quarter and he expected the business to be profitable this year.

He added: “[We] have a strong track record of responding to inflationary headwinds by adapting our business, and over time, we are well placed to mitigate their impact through careful management of our cost base and the delivery of significant cost efficiencies.”

Over the past year Whitbread has been closing and converting hundreds of its branded restaurants into Premier Inn hotel bedrooms. Long term, the group said this will allow it to open around 3,500 new rooms across its portfolio.