Executives at British hotel firm Whitbread PLC, which runs brand Premier Inn, the United Kingdom’s largest brand by hotel and room counts, said the firm is in the process of disposing a portfolio of freehold Premier Inn hotel assets for a sum of approximately £1.5 billion ($2 billion).
Its executives also said the firm would become a pure-play hotel business by 2031, with all of its 197 restaurants brands either repositioned in an “integrated food and drink model” or converted into a total of 8,000 more rooms across its U.K. and Ireland estate.
During a presentation and conference call accompanying the firm’s full-year 2025 results (the year ending Feb. 26, 2026), executives said that profit before tax fell 19% to £298 million and net debt increased by almost 47% to £709 million.
Its new five-year plan and its March Premier Inn brand relaunch will result in the firm having 96,000 rooms in the U.K., said Mark Anderson, managing director, property and international.
CEO Dominic Paul said the portfolio for sale makes up approximately 20% of Whitbread’s owned hotel assets, with the sale, if successful, reducing its owned portfolio from approximately 50% of all Premier Inn freeholds to a range between 30% to 40%.
He added the development is part of a “strategic review aimed at transitioning the business towards a more capital-light model … and shifting to a majority leasehold structure.”
“Maintaining the status quo was never the starting point … our plan generates the most value over the medium and long term,” he said, adding that cost pressures of late have been significant.
“It is fair to say the last two U.K. governments budgets have not been kind to the hospitality business,” he said.
Paul said the Whitbread board considered all possibilities, including becoming a pure franchisee and becoming 100% leasehold.
Both options, he said, had their drawbacks, with Whitbread’s current strength deriving from its “investment-grade balance sheet” and scale and ownership that create notable leverage.
He said to create the highest value in the medium and long terms, the company needed an integrated approach, hence the two headlines, the sale of a portion of its freehold estate and the wholesale changes in its food-and-beverage offerings.
“Premier Inn enjoys 12% market share in the U.K., the highest percentage in any market in the world.
Whitbread desired to have “a complete moat around our business” but is cognizant that “capital intensity is a drag on free cash flow and shareholder returns,” Paul said.
“This is an important day for Whitbread,” he added, a “step-change for our margins. … We looked hard at our business with a completely open mind. The plan is bold, ambitious and deliverable."
He said by recycling more freehold properties into growth projects, he expects “to deliver an incremental adjusted profit before tax contribution of £275 million by full-year 2031 and an increase in group return on capital employed by 500 basis points.”
Paul did not refer to activist shareholder Corvex, which in December urged the board to put in place strategies that would add value.
Hemant Patel, chief financial officer, said the five-year plan will see £2 billion returned to shareholders.
In its latest earnings, the company across Whitbread’s U.K. estate posted a 1% increase in both rooms revenue and revenue per available room, while its Premier Inn U.K. estate saw rooms revenue increase by 1.9% and RevPAR by 0.9%.
Whitbread returned £419 million to shareholders, committed £697 million in capital expenditure and posted adjusted earnings before interest, taxes, depreciation and amortization of £1.07 billion.
The firm’s adjusted profit before tax of £483 million is an exact replica of its performance for the same period to the end of full-year 2025.
German gains
Paul said the company is making strides in Germany, even though it has taken a “long time to make [it] profitable, and we are still not where we want to be.”
He said by 2031 the country would see a 50% addition in rooms to approximately 18,000 rooms.
“Reaching profitability in Germany for the first time represents an important step for Whitbread,” Patel said, adding the firm now knows what works and what does not work in its second market.
“This reflects a positive trading performance, accelerated cost efficiencies and a marked increase in German profitability, offset by high cost inflation and interest costs,” he added.
Patel said in Germany there was a 12% increase in rooms revenue and a 6% increase in RevPAR.
Premier pizzazz
Such was the excitement at Whitbread about its new plan, the earnings results presentation saw a little hoopla, with a video from comedian Lenny Henry and several other Whitbread big guns joining the stage during a live stream.
Anderson said he expected to continue the benign outlook for supply growth in the independent sector in the U.K., thus providing opportunities for Whitbread.
He said new-build construction in the U.K. is at its lowest level compared with other historical declines.
He added two additional opportunities for the firm was in London, where he said it currently only has a small proportion of market share and to which 43% of its committed pipeline is pointed to, and within its Hub by Premier Inn brand — currently with 19 hotels and 3,000 rooms in London and Edinburgh — where the timeline is to have 5,000 rooms by 2031.
Anderson said Hub is compelling due to its higher density of rooms per square foot, and he announced the first Hub asset in Germany, an acquired site in Berlin.
Simon Ewins, managing director, U.K. hotels and restaurants, said the announced changes to its food-and-beverage offerings, “materially challenged since the pandemic,” already has resulted in 70% of planning applications approved.
He said of the entire estate of 197 restaurants already in the process of conversion, 51 have been sold for a total of approximately £51 million.
Eighty-seven restaurants will be changed into additional accommodations. Job losses will be incurred.
Ewins said the entire five-year plan “will drive £100 million in incremental profit before tax by 2031,” he said, although the firm is predicting a loss of £10 million in full-year 2027.
Joe Garrood, chief commercial officer, said “our book position into summer is positive.”
He added the March relaunch has created a new tagline for the firm: “You know what you’re getting,” which he said is a “super power of consistency.”
There would be, he added, select use of online travel agency distribution, but only for inbound business.
As of press time, Whitbread’s stock was trading on the London Stock Exchange at £23.28 per share, a decrease of 10.2% year to date. The London Stock Exchange’s FTSE 100 index was up 21.7% over the same period. (Note that Whitbread refers to the above results as full-year 2026 preliminary results.)