Investors took profits at Premier Inn owner Whitbread PLC (LSE:WTB) after it reported lower sales and profits in the first half of the year, but beat analysts' forecasts.
Shares in the FTSE 100-listed group fell 8.6% to 2,945.5p in the first hour of trading on Thursday, having rallied over 8% over the previous two months.
Revenues of £1.54 billion were generated in the 26 weeks to 28 August, down 2% on the year earlier, slightly above the average City estimate of £1.53 billion.
UK revenue per available room (revpar) for the second quarter was 0.6%, improving from a decline of 2.4% in Q1, with like-for-like accommodation sales growth down 1% while food and beverage sales also fell 1%.
Adjusted pretax profit fell 7% to £316 million, but handily beat the analyst consensus of £311 million.
Whitbread moderated its full-year profit guidance for Germany to "up to £5 million", down from the previous £5-10 million range, following softer market conditions.
In the UK, higher cost inflation will be partly offset by increased efficiencies of £65-70 million, versus previous guidance of £60 million, while recent sale-and-leasebacks are expected to add £5-10 million in lease costs.
CEO Dominic Paul hailed the UK's return to market growth, which Whitbread continued to outperform.
"We are making strong progress on our Accelerating Growth plan which, together with our committed pipeline of both Premier Inn and 'hub by Premier Inn' rooms, means we remain on track to reach at least 98,000 open rooms by FY30, extending our position as the clear market leader."
He stressed that disciplined capital allocation and increasing financial returns are key areas of focus, with £99 million of sale and leasebacks completed, putting the group on track to recycle £1 billion by the 2030 financial year "to fund future high-returning growth".
"We're making great progress against our strategic priorities and our five-year plan is firmly on track to deliver a step change in profits, margins, and returns."
He said the company remains confident in returning £2 billion to shareholders through share buy-backs and dividends, and along with an interim dividend kept flat of 36.4p per share, is "on track" to complete the previously announced £250 million share buy-back by the time of final results.
Analysts at UBS said: "Overall, we see the results as reassuring, but note the shares have rallied into results."
** UPDATE: Adds share price details **