Premier Inn owner eyes £1b sale and leaseback of hotels to fund growth

The owner of Premier Inn is planning to sell and lease back at least £1b of its mature hotels to fund its future growth.

Whitbread said there were signs the property investment market was improving and it had a pool of sites where there was “an opportunity to generate additional value”.

Whitbread completed the sale and leaseback of two hotels for £56m in the first half of 2025, creating an average yield of just over 4%. It is progressing on the sale and leaseback of a further seven hotels across a variety of regional UK locations.

At least £1b of the group’s more mature properties will be “recycled” this way as part of a five-year plan to return at least £2b to shareholders.

Chief executive Dominic Paul said “confidence” in the five-year plan meant Whitbread would complete a £250m share buy-back over the next 12 months.

He added: “With a more favourable outlook in the property investment market, we will look to recycle at least £1b of our more mature property assets to fund future growth and drive higher financial returns."

Whitbread saw revenue drop 1% over the 52 weeks to 27 February 2025, while pre-tax profits fell 14% to £483m.

The group said planned restaurant closures across its estate, softer UK market demand and cost increases had seen a dip in profits.

Last year the Premier Inn operator announced plans to convert 112 branded restaurants into bedrooms and exit 126 restaurants altogether.

In the next 12 months the group plans to open between 1,000 and 1,200 new rooms un the UK, of which between 500 and 700 will be in former F&B destinations.