* Whitbread to press on with Premier Inn London expansion
* Costa Coffee sales prove bright spot (Adds CEO quote, details)
By Rahul B
Jan 26 (Reuters) - The head of Whitbread Plc, theowner of Premier Inn hotels and the Costa Coffee chain, said thecompany would stick to its plans to expand in the London hotelsmarket despite reporting a slowdown there.
The FTSE 100 company posted an 8.6 percent rise in sales forthe three months to the start of December as underlying businessat its Costa Coffee chain strengthened but weakness at PremierInn weighed, sending its shares as much as 6 percent lower.
The company has opened 15 hotels in Britain since the startof year, of which five were in London.
Total revenue per available room -- the hotel industry'spreferred measure -- fell 6 percent for the third quarter forits London hotels.
However, Chief Executive Alison Brittain said the Britishcapital remained a priority.
"We have a lower market share in London, so we would like togrow more in London," Brittain told Reuters.
"London hotels mature more rapidly against the regionalones, which take 3-4 year to mature but London hotels take ayear or so," she added.
The company plans to have a total of 18-20,000 rooms inLondon by 2020, according to its latest annual report, anincrease from a current figure of 11,500.
It had blamed subdued corporate demand for the shortfall inLondon when it reported interim results in October.. Luxury hotel group Millennium & Copthorne also echoed this concern.
Coffee sales were perkier and Brittain reassured investorsthat the group's annual figures should meet forecasts.
"Trading since the end of the quarter is such that we expectto deliver full year results in line with expectations," shesaid.
Like-for-like sales at high street coffee chain Costa grew4.3 percent in the 13 weeks to Dec. 1, up from a 2 percent risein the 13 weeks to the start of September.
The company said in October it was trying new blends andfresh food options to woo back the discerning coffee drinkers ina highly competitive area.
"We are looking at projects to roll out more successfulelements of those trial to our full estate," Brittain said.
Under Brittain, who took over in September 2015, the companyfaces a tough task of keeping costs tight as it looks expandinternationally.
In Germany it has opened a Premier Inn hotel in Frankfurtand plans to add two more in Munich and Leipzig by 2018. (Reporting by Rahul B in Bengaluru; Editing by SusanThomas/Keith Weir)
Whitbread (WTB)