UBS trims Whitbread price target as sluggish UK hotel market clouds near-term outlook Proactive uses images sourced from Shutterstock
UBS has nudged down its price target on Whitbread PLC (LSE:WTB), the Premier Inn owner, from 3,605p to 3,575p and cut profit forecasts through to 2028, citing a lacklustre start to the year for UK hotel room rates and a growing list of economic headwinds facing the business.
The Swiss bank said revenue per available room, a key industry performance metric known as RevPAR, had turned slightly negative since the start of 2026, weighed down by stalling interest rate cuts, inflationary pressure linked to the Middle East conflict and rising unemployment.
Additional business rates charges taking effect in April will compound the pressure, UBS said, though it does not expect Whitbread to pass the full cost on to consumers, given the fragile economic backdrop.
The bank trimmed its earnings per share estimates by 3%, 5% and 8% for 2026, 2027 and 2028 respectively, and now forecasts pre-tax profit of £442 million for 2027, below the £465 million consensus, and £470 million for 2028, against a consensus of £492 million.
Despite the downgrades, UBS retains a buy rating, arguing that Whitbread remains the UK’s dominant budget hotel operator with more than 85,000 rooms and a strong enough brand and balance sheet to take market share from weaker independent competitors, particularly as rising costs squeeze smaller rivals.
The bank also sees potential for Whitbread to outperform the broader UK hotel market on room rates in 2027, supported by a development pipeline weighted towards London and constrained industry-wide supply growth.
UBS notes that the current share price implies the market is pricing in a 7.5% decline in UK RevPAR for 2027, against its own forecast of 1% growth, a gap it regards as excessive and central to its buy case.
Full-year results on 30 April are the next significant catalyst, at which point Whitbread is expected to outline its strategic response to the business rates increase.