Whitbread, the owner of Premier Inn, has announced a £1.5bn sale of freehold rights to a number of its hotels as part of a strategy to win back investors. The FTSE 100 company revealed the move on Thursday as part of a new five-year plan, responding to the “unexpected” impact of business rates following last year’s Budget, which raised tax bills for thousands of hospitality firms.
Cost-cutting measures accelerated
Whitbread has stepped up cost-cutting in recent months to mitigate the effects of the business rate changes. Chief Executive Dominic Paul said: “In light of significant cost increases in the form of business rates and National Insurance, as well as the implied market discount to our inherent value, we’ve looked hard at the options open to us.” The new plan also includes a £1bn reduction in capital spending, with the aim of generating £2bn in cash flow for shareholders by 2031.
Financial performance and asset sale
The company reported flat revenue of £2.9bn for the year to February 2026, while pre-tax profit fell 19% to £298m. The sale-and-leaseback deal will provide a short-term cash injection, though it means Whitbread will lose ownership of the properties but continue to lease them. This approach can leave firms vulnerable to rent hikes and economic downturns.
Criticism of tax burden
Whitbread has been vocal about the tax burden on the hospitality sector, expressing “extreme disappointment” with the Treasury’s business rate changes. While the government later offered a £300m support package for pubs, hotels and restaurants were excluded from relief, which took effect this month. Whitbread, founded as a brewery in the 18th century and listed in London since 1948, saw its shares close at 2,383p on Wednesday, down 6% year-to-date.
