Premier Inn Owner Whitbread Warns Business Rates Impact Will Deter Investment

The chief executive of Premier Inn owner Whitbread, Dominic Paul, has issued a stark warning regarding the potential ramifications of proposed changes to business rates. He emphasised that these adjustments could significantly hinder investment and hiring across the hospitality sector.

Paul highlighted that despite Whitbread previously anticipating a cost impact of up to £50 million from the latest budget measures, they now expect the figure to be approximately £35 million by 2027. He noted that this remains a substantial increase in costs for the company.

As the hospitality industry continues to navigate rising business rates, Paul called for a comprehensive approach to reform. He advocated for the removal of increases in business rates, a reduction in the level of employers’ national insurance contributions, and the consideration of lower VAT rates for the sector to stimulate consumer spending.

The government’s anticipated intervention could potentially announce aid specifically for pubs that are struggling under increased business rate bills. Reports suggest that relief amounting to £300 million is being considered; however, it appears to be exclusively aimed at pubs, leaving other sectors such as hotels and restaurants unaddressed.

Paul expressed concern that hotels are facing a more severe impact than other areas within the hospitality industry. In light of these challenges, Whitbread has reported solid third-quarter results, putting the company on track to meet market expectations. The hotel operator anticipates realising savings of between £75 million and £80 million this year across various operational areas.

In the UK, Whitbread operates around 850 hotels, comprising 86,000 rooms. During the three months that ended in September, accommodation sales rose by 2 per cent, providing some consolation amid the ongoing pressures on the food and beverage segments.

As Whitbread restructures its restaurant operations, which includes converting 112 establishments into approximately 3,500 new hotel bedrooms, shareholders are keenly observing the company’s capital allocation strategies and overall direction.