Premier Inn owner Whitbread plans to expand the hotel chain after selling its Costa coffee business to Coca-Cola for £3.9bn.
The deal was announced earlier this year, and on Tuesday Whitbread boss Alison Brittain said it was “the highlight of the first half”.
The sale has been approved by shareholders, but now requires regulatory approval from authorities in the EU and China.
“Much work still remains to be done to ensure a smooth and successful separation from Whitbread at completion and during the following transitional service period, which we are confident in our ability to execute efficiently,” said Ms Brittain.
She added: “Following the sale of Costa, Whitbread will be a focused hotel business with operations in the UK, Germany and the Middle East.”
The company said its UK network has grown to more than 74,000 rooms, with plans for a further 13,000 in the pipeline, and the potential for further expansion to 100,000 and more.
The group is also aiming to grow in Germany, with a target of almost 6,000 rooms.
The plans tie in with Whitbread’s recently announced new hotel brand Zip, which will offer no-frills hotel rooms to “value-conscious” customers, with prices starting from £19 a night.
Whitbread updated the market on its plans for the Premier Inn chain while reporting its interim results for the first half of the financial year.
Revenue was up 2.6 per cent to £1.08bn, compared with £1.05bn in the same period of last year, while pre-tax profit edged up 0.2 per cent to £257m.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said that while sales at existing Premier Inn hotels are flat, “that’s not to be sniffed at given the weak consumer environment”.
He also noted that Whitbread has added 14,000 new rooms over the last three years, which is 2.5 times the number added by Travelodge, Holiday Inn Express and Ibis combined over the same period.
Mr Khalaf said there is a real growth opportunity in Germany, where the hotel market is 35 per cent larger than the UK’s but there is a lack of branded budget options.
The expansion plan will be helped by the incoming cash from the sale of Costa, although it’s unclear just how much of those funds will be available for investment, he noted, adding: “Whitbread will be a slower and steadier business once Coke has swallowed Costa.”
