Premier Inn owner Whitbread's higher sales, lower tax hit lift shares

Whitbread cuts expected hit from UK business ⁠rate hikes

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Premier ‌Inn sees revenue growth in UK ⁠and Germany

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Shares rise as much as 7%

Jan 13 (Reuters) - Whitbread on Tuesday reported higher third-quarter sales, ‍driven by strong demand and firm pricing at its Premier Inn hotels in Britain ⁠and Germany, sending its shares up as much as 7% in early trade.

The hotel operator also cut its expected hit from business rate hikes announced in Britain's autumn budget to about ​35 million pounds ($47 million) from an earlier estimate of 40 million-50 million pounds, but warned the proposed changes remained a threat to hospitality firms' prospects.

"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 ... continue to press the UK Government for changes," CEO ‌Dominic Paul said in a statement.

Whitbread, which is under pressure from activist investor Corvex to consider a strategic review, ‌has been exploring ways to boost margins and returns, but gave no further details.

Shares of Britain's largest hotel operator were up 4% at 2,688 pence at 0845 GMT. They ‌have fallen about 6% in the last 12 months.

"In the short term, this was a strong result," ​Bernstein analyst Richard Clarke wrote, but said key questions remain - including the long-term impact of business rate changes, adjustments to Whitbread's five-year plan, and its response to activist pressure.

Whitbread, which is revamping underperforming ⁠restaurants under its growth plan, said UK accommodation sales and ‍revenue per available room - a key industry metric - were both up 4%, while sales in Germany rose 11% in the six ​weeks to January 8.

Third-quarter group sales rose 2% to 781 ⁠million pounds, and Whitbread raised its cost-savings target for fiscal 2026 to 75 million-80 million pounds from 65 million-70 million pounds.

Whitbread