Leisure group Whitbread is in talks to merge its Premier Inn budget hotel chain with rival company Travelodge.
Talks between the two firms at are an early stage, according to The Times.
Travelodge, which was acquired by Dubai International Capital for £675m in 2006, operates 22,000 rooms in the UK and plans to open 100 properties in Spain by 2020.
Premier Inn operates 32,500 rooms in the UK.
A merger of the two chains could create a group worth as much as £3bn, with a stranglehold on the UK budget hotel sector.
Both Travelodge and Whitbread declined to comment on the speculation.
By staff writer