Premier Inn owner Whitbread warns on impact of UK property tax

Whitbread warned on Friday that British budget measures would cost the Premier Inn owner 40-50 million pounds ($66 million) in its next fiscal year, as a sharp increase in business rates threatened to squeeze its margins.

Finance minister Rachel Reeves' budget raised taxes on high-value commercial properties, posing a fresh challenge for Britain's hospitality industry, which has been grappling with labour shortages and higher operating costs since the pandemic.

Britain's largest hotel operator, with over 840 hotels across the country, said it would explore various options to drive profits, margins and returns as significant increases in rateable values for many hotels would drive up taxes.


Bernstein analyst Richard Clarke said a sample of 67 Whitbread hotels showed a median rateable value increase of 174%, with most going above the 500,000 pound relief level.

"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," Whitbread CEO Dominic Paul said in a statement.

'A HAMMER BLOW'

Whitbread's shares fell by more than 7%, leading losses on London's bluechip index, after its update. They had fallen earlier after Bernstein double downgraded the stock to "underperform" from "outperform".

"We were big fans of the Whitbread five-year plan, but the government has derailed it (again)" Bernstein's Clarke said in a note, noting that the changes represented a "hammer blow" that puts the company's plan in jeopardy.

Whitbread maintained its fiscal 2026 outlook and said UK trading remained positive in the third quarter, while its German business was on track to reach profitability this year.

The company now expects gross UK cost inflation to reach between 7% and 8% on its 1.7 billion pound cost base, but accelerated efficiencies of 60 million pounds would bring the net figure down to between 3.5% and 4.5%. ($1 = 0.7575 pounds)