There was some relief for shareholders in Whitbread PLC (LSE:WTB) on Tuesday after the owner of Premier Inn chain said the impact of higher business rates would be less severe than feared and lifted its cost-savings target.
The shares opened 4% higher at 2,686p, clawing back some ground after a sharp sell-off in late November following the Budget.
In a note reacting to the update, analysts at Panmure Liberum reiterated their 'buy' rating on the stock, with a target price of 3,640p.
They said recent trading momentum remained strong and that management action on costs had helped soften the blow from higher rates.
For the third quarter of the 2026 financial year, Whitbread reported improving performance across its core markets. In the UK, revenue per available room, a key hotel industry measure known as RevPAR that combines room rates and occupancy, rose 3%.
In Germany, where the group is still building scale, RevPAR increased 7%. As a result, total group sales grew 2% to £781 million.
That momentum has carried into the new year. Over the six weeks to 8 January, UK accommodation sales and RevPAR were both up 4%, while in Germany accommodation sales rose 11%, with RevPAR up 5% to €56.
The key new development for the market, however, was on costs.
Whitbread said it now expects to deliver £75 million to £80 million of cost synergies in the 2026 financial year, up from a previous target of £65 million to £75 million.
These savings are expected to come from areas such as labour, technology and procurement. At the same time, the estimated net impact of post-Budget business rates changes has been reduced to about £35 million, down from an earlier estimate of £40 million to £50 million.
Panmure said this combination gave scope to reverse some of the earnings downgrades made after the Budget. The broker’s current forecasts put profit before tax at about £460 million for 2026, easing to £430 million in 2027 and £434 million in 2028.
Whitbread shares are still down almost 19% over the past three months, reflecting the initial shock from higher rates, but they have risen nearly 12% more recently as hopes of mitigation and relief have grown.
Panmure said the shares were trading on a 2026 enterprise-value-to-EBITDA multiple of about nine times and a price-to-earnings ratio of 13 times, levels it considers undemanding.
The broker added that a stronger second half in the UK could help reassure the market that favourable supply conditions remain in place and that current room prices can be sustained.
Faster room additions and Germany moving towards break-even were also cited as supportive factors.
On capital returns, Whitbread has completed £217 million of its previously announced £250 million share buyback, while continuing to recycle capital through sale-and-leaseback deals worth £250 million to £300 million, with £89 million completed so far at what the broker described as attractive yields.