UK-based hotel owner Whitbread has announced plans to close its remaining 197 branded restaurants and expand food and beverage options within its Premier Inn hotels, a move that could see a loss of up to 3,800 jobs, reported Reuters.
The company outlined the shift as part of a broader review prompted by increased property costs, economic pressures, and calls from activist investor Corvex to enhance shareholder value.
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This transition is expected to affect Whitbread’s adjusted pre-tax profit, projecting a reduction of £10m ($13.5m) in the financial year ending February 2027.
In this period, the company plans to convert underperforming restaurants into hotel rooms and adopt a fully integrated restaurant model in its hotels.
It is reallocating capital to achieve higher financial returns, with a forecast of £2bn in free cash flow available for shareholder returns by the 2031 financial year.
However, Whitbread stated it will pause share buybacks this year as it invests in changes to operations.
As part of the new strategy, the company intends to sell £1.5bn in freehold property, reducing its proportion of owned hotels to between 30% and 40%.
This will mark the first time since Premier Inn’s founding in 1987 that Whitbread will operate as a majority leaseholder.
The proceeds are expected to fund growth and minimise net capital expenditure.
Whitbread also reported that forward bookings for its hotels have exceeded last year’s levels, supported by seasonal travel demand and events.
It signalled continued growth ambitions in the UK and Germany, aiming to extend its Accelerating Growth Plan to replace the remaining branded restaurants and increase the number of hotel rooms to 96,000 in the UK and Ireland by 2031.
In Germany, the company targets an expansion to 18,000 rooms over the same period, with an emphasis on driving cash flow and capital returns following recent profitability.
Whitbread CEO Dominic Paul said: “Our New Five-Year Plan builds on our strengths and drives a significant acceleration of our strategy.
“In the UK, by reallocating some of our capital spend and building on the success of our Accelerating Growth Plan, we plan to convert all our remaining branded restaurants to an integrated food and beverage offer that is preferred by our hotel guests and will unlock the addition of more highly profitable extension rooms.
“Our continued efforts to drive our commercial plan and efficiencies will extend our market-leading position and allow us to take share from our competitors, many of which are struggling to grow.”
Whitbread cited an additional £5m impact from the ongoing conflict in the Middle East affecting its hotels in the region.
The company said its five-year plan aims to increase group return on capital employed by 500 basis points and deliver £275m in additional adjusted profit by 2031 compared to 2026 while targeting £250m in cost efficiencies.
