What Premier Inn’s Results Tell Us About Budget Travelers and Rising Costs

Whitbread, which owns budget hotel chain Premier Inn, demonstrated mixed but generally stable performance in its third quarter — with particularly strong growth in Germany offsetting slight weakness in the UK market.

The numbers: Overall revenue per available room declined 2.5% year-over-year systemwide, but UK bookings remained 51% above pre-pandemic levels thanks to demand from international visitors driving London occupancy levels to 83%.

Strong German growth: Premier Inn’s nascent German business of about 60 hotels saw sales grow 23% in the quarter, accelerating to 37% in December and early January. The gains came from leveraging online travel agencies to build brand awareness in the market, executives said.

Why it matters: Premier Inn’s performance indicates the budget hotel segment continues to outperform mid-market hotels, suggesting economic pressures are pushing travelers toward value options.

Rising costs: Barclays analysts warned in a flash report of potential headwinds in 2025-26 due to rising interest costs. However, these same higher rates could benefit Premier Inn by limiting new hotel development and reducing competition.

Efficiency push: “It’s clear that labor costs have got slightly more expensive,” said Whitbread CEO Dominic Paul. Trimming staff and adopting automation may help, he added. Paul felt confident the company could achieve hundreds of millions of dollars in cost efficiencies by 2030, partly by converting underperforming restaurants into hotel rooms.

What’s next in the UK: The company continues to focus on its UK restaurant-to-hotel conversion strategy, with early results showing improved guest satisfaction in converted spaces.

What’s next in Germany: Premier Inn’s business in Germany should also become profitable soon. “Over the second half of this financial year that’s closing and the first half of next financial year, so that 12-month period, we would expect to be making profit in Germany,” said Whitbread CFO Hemant Patel.

Brand strength: Paul said he liked Premier Inn’s positioning in the market. “Customers love that they know that they’re going to get from us a really consistent experience, they know that they’re going to get a great night’s sleep, best beds in the business, a really good breakfast, warm and friendly service, all at a strong value proposition.”

Accommodations Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.

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