Whitbread PLC (LSE:WTB) received a warm response from the market after updates from both Shore Capital and Peel Hunt highlighted improving hotel trading and a better-than-feared cost outlook.
The third-quarter update showed clear progress in the UK. Revenue per available room, or RevPAR, rose 2.5% in the three months to the end of November, a marked improvement on earlier quarters.
Momentum has continued into the fourth quarter, with UK RevPAR now positive for the year to date. London has been the main driver, with higher room rates offsetting slightly lower occupancy.
Germany continues to stand out. Sales rose 17% in the quarter, with strong RevPAR growth across the estate. Established hotels are comfortably outperforming the wider market and remain on track to reach profitability this year, a key milestone for the group.
Costs were the other big positive. Whitbread has lifted expected cost savings for the 2026 financial year and reduced the anticipated hit from business rate increases in 2027.
Shore Capital estimates the combined benefit at around £20 million heading into 2027, providing support to profit forecasts and easing concerns triggered by last autumn’s Budget.
Peel Hunt struck a similar tone, describing the update as positive on both trading and cost-cutting.
It said Whitbread is outperforming the market in both the UK and Germany and now expects to deliver an extra £10 million of cost savings in 2026. It also noted that the impact of higher business rates in 2027 is now expected to be £10 million lower than first feared.
Looking ahead, Whitbread is reviewing ways to lift profits and returns in light of the Budget changes, with a fuller update promised alongside full-year results on 30 April.
Peel Hunt said the trading update should come as a relief to investors after a difficult period and reiterated its buy rating with a 2,750p target price.
After two challenging years marked by weak UK demand and rising costs, sentiment is starting to improve. Trading is firming, Germany is delivering, and cost headwinds are easing.
The shares are up 5% at 2,705p.