Hospitality giant Whitbread, the owner of the Premier Inn hotel chain, has announced that the financial impact of upcoming business rates changes will be lower than initially projected, though it continues to label the government's policy as damaging to the sector.
Revised Forecast for Rates Impact
In a trading update on Tuesday 13 January 2026, the FTSE 100 company stated it now expects an annualised hit of around £35 million from the business rates reforms set out in the autumn budget. This marks a significant reduction from its initial warning in November, which estimated the cost could reach between £40 million and £50 million per year from the 2027 financial period.
Despite the revised, lower figure, Whitbread emphasised that the tax changes remain "damaging" for the wider hospitality industry. The group, which also operates the Beefeater and Brewers Fayre brands, confirmed it is actively lobbying the government for a policy rethink.
Strong Trading and Increased Cost Savings
The update was delivered alongside positive trading news. Whitbread reported group sales growth of 2% to £781 million for the 13 weeks to 27 November. This performance was driven by its Premier Inn operations in both the UK and Germany.
In the UK, total accommodation sales increased by 2%, with a key industry metric, revenue per available room (RevPAR), rising by 3%. The company noted this positive momentum continued into the new year, with both measures up 3% in the six weeks to 8 January.
Furthermore, Whitbread revealed it is on track to deliver greater cost efficiencies than previously forecast. It now expects to achieve savings of between £75 million and £80 million for the full 2026 financial year, up from prior guidance of £65-70 million. These savings are being realised through improvements in labour, technology and procurement.
Restructuring and Strategic Focus
These efforts form part of a major restructuring programme launched in 2024, which involved cutting approximately 1,500 jobs. The strategy involves reducing the group's branded restaurant estate by around 200 sites to focus investment on expanding its hotel room portfolio.
Chief Executive Dominic Paul commented on the quarter's results: "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 against our key initiatives."
The business rates changes, which take effect in April, involve a complex recalculation for UK commercial properties. While the government's multiplier was reduced, the phasing out of a transitional 40% relief scheme and new property valuations have led to substantial increases for many hotels and pubs, leaving the sector facing higher overall tax bills.
