Whitbread (LON:WTB) management struck an upbeat tone in its Q3FY26 trading update call, citing strengthening demand trends in both the UK and Germany and a larger-than-expected contribution from its ongoing efficiency programme. Chief Executive Officer Dominic Paul, along with Chief Financial Officer Hemant Patel, said the business momentum seen at the start of the year continued throughout the quarter and has further improved in the current period.
In the UK, Whitbread reported continued market improvement, with occupancy remaining high in 83% and RevPAR increased by 3% in the third quarter. Paul said the company maintained a “healthy premium” to the rest of the economy and midscale market.
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London stood out as a key factor, where Whitbread increased both occupancy and rates, resulting in RevPAR growth of 7% year after year. Responding to a question about whether London’s performance was “uneven”, Paul said it was “consistently strong” during the quarter and reiterated confidence in London as a market where the group is expanding its capacity.
Paul also addressed questions about the slight year-over-year decline in occupancy despite RevPAR growth. He said occupancy in the current trading period was “very, very close” to the previous year, emphasizing Whitbread’s focus on optimizing “every room, every night”, with some hotels beating last year in occupancy while others were slightly lower.
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Looking at the first part of the fourth quarter, Whitbread said the UK’s performance strengthened compared to the third quarter. In it six weeks until January 8, 2026, Total lodging sales and RevPAR increased by 4%and the company said it outperformed the broader market. Paul attributed the outperformance to a combination of product consistency, brand strength, location quality and active revenue management. He also highlighted advances in CRM and data usage, noting that most customers book directly.
Management said UK food and drink sales were in line with expectations as Whitbread continues to execute its accelerated growth plan. Paul framed the effort as a guest experience initiative and profitability improvement program, focused on transforming some lower-profit brand restaurants into higher-profit hotel extensions.
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Whitbread said its German business had a strong quarter and remains on track to reach profitability this year. In the third quarter, Total lodging sales increased by 12% and RevPAR increased by 7% in local currency, which management attributed to the growing maturity of the heritage and brand along with commercial initiatives.
The momentum was also maintained in the current period. During the first six weeks of the quarter, Whitbread reported Total lodging sales increased by 11%. year after year and Total equity RevPAR increases by 5% to €56. More established hotels performed ahead of the broader German portfolio, with RevPAR of 66 euros, 8% more.
On costs, management said the group’s efficiency program is exceeding previous expectations. Whitbread increased its expected FY26 savings by £10 million to a range of £75m to £80m. Patel later confirmed that the incremental savings are “all in cash” and represent “real profit and loss money.” He described the program as comprising many initiatives across the cost base, including labor, procurement and technology, and emphasized that it focuses on “real efficiencies” rather than simply cutting investment.
Patel provided an example from food and beverage supply, where Whitbread moved from a warehouse and site-by-site model to a wholesale model, which he said reduced procurement costs and improved delivery efficiency through a shared network. Management also referenced investment in technology, including past examples such as robot vacuum cleaners, and said future opportunities are expected from AI applications, such as better work scheduling and forecasting.
For FY27, Whitbread maintained its underlying inflation assumptions but reduced its estimate of the cost impact of UK business rates after receiving clarification on transitional relief mechanisms affecting more than 1,000 properties. The company now expects a around £35 million impact in FY27, below a preliminary estimate of £40m to £50m. Paul called the proposed changes to business rates “punitive” and said Whitbread and the wider hospitality industry are lobbying the UK government for changes, noting there is an ongoing consultation process due to end in mid-February.
taking into account £60 million of efficiency savings expected next year, Whitbread said it now forecasts Net inflation in FY27 at 3% to 4%. Management said it plans to provide more details on the mitigation and broader five-year plan in full-year results in April, including views on phasing out beyond FY27. Patel noted the company also expects to challenge valuations starting in April, although the timing and extent of refunds are uncertain.
During the Q&A, management discussed a transaction with LondonMetric as part of its capital recycling program. Paul said Whitbread had earlier in the year guided £253 million of disposal proceeds for the full year, including sales and leasebacks and other disposals, and said the company remains on track. The deal with LondonMetric was described as £89m across nine sites in a initial net yield of 5.3%covering regional and London locations.
Paul said these types of deals take time and did not happen overnight, and while changes in business rates can have a “small impact” on sale and leaseback prices, he said it was not significant in this case. He reiterated that the proceeds are intended to support investment in higher-return projects, including the accelerated growth program, which he said generates “teenager” returns on capital.
Management also reiterated that it is reviewing a range of options to boost earnings, margins and profitability and will update the market on its five-year plan when full-year results are presented in April. Paul said the board regularly reviews strategic options and cited past structural decisions, such as separating and selling Costa Coffee and announcing the accelerated growth plan, as examples of the company’s willingness to make significant changes where appropriate. He added that shareholder views will be considered as part of the current review.
On FY26 expectations, Patel said the additional £10 million of efficiency savings should flow through to the bottom line, and that continued business strength could represent upside potential versus previous forecasts depending on RevPAR assumptions, while reiterating that Whitbread does not guide on RevPAR.
Looking ahead, Paul said the UK’s future visibility remains limited, but the booked position for FY27 is increasing and is ahead of last year, with positive long-term leisure bookings in peak periods. In Germany, he said, Whitbread continues to perform ahead of the market and remains on track to achieve profitability.
Whitbread is the owner of Premier Inn, the UK’s largest hotel brand, with 86,000 rooms in over 850 hotels and a growing presence in Germany with 10,500 rooms in 59 hotels, offering quality accommodation at affordable prices in great locations. People are at the heart of our business. We employ over 38,000 team members in over 900 Premier Inn hotels across the UK and Germany.
The article “Highlights from Whitbread’s Q3 earnings calls” was originally published by MarketBeat.
