Premier Inn owner Whitbread has warned that the proposed changes in business rates will cost the company £35million from 2027.

While the cost is lower than Whitbread had expected, the hospitality group stressed the changes announced in November’s Budget are still ‘damaging’ for the industry and is pushing the Government to change its policy.

Whitbread had previously said it expected the changes to business rate relief to cost between £40million and £50million.

Chief executive Dominic Paul said: ‘We continue to believe the proposed changes to business rates are damaging for the overall sector and will impact future investment and job creation and we, along with the wider hospitality industry, continue to press the UK Government for changes.’

He joins other business leaders who have criticised the business rates system, which disproportionately hits the retail and hospitality industries. 

Despite the business rate hit, Paul said the company was ‘well-positioned’ to adapt to shifts as it reported a strong performance in the third quarter.

Premier Inn’s UK business returned to growth with a 2 per cent increase in total sales, while Germany jumped 12 per cent, having previously posted weaker-than-expected numbers.

This was partially offset by weaker numbers in its food and beverage business as it plans to transform some of its restaurants into hotel extensions.

Total group sales were up 2 per cent to £781million, offset by a fall in food sales.

In the six weeks to 8 January, total UK accommodation sales and revenue per room available both increased by 4 per cent. Total sales in Germany jumped by 11 per cent while room revenue increased 5 per cent to €56. 

Paul said: '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 and will deliver a higher level of efficiencies in FY26 than previously expected.'

Shares in Whitbread were up 3.64 per cent to 2,678p on the open. 

Richard Hunter, head of markets at Interactive Investor said: 'Much has been done, but there remains much to do, although the positive reaction to the update is a step in the right direction. 

'The share price has suffered in a tough environment, falling by 10 per cent over the last year, as compared to a gain of 23.3 per cent for the wider FTSE100, and by 29 per cent over the last two years. 

'Even so, this long-established and well-regarded company continues to attract the support of investors with the market consensus holding steady at a buy, although it is increasingly clear that patience will be required for the long haul as it moves through its five-year transformational plan.'