Premier Inn owner Whitbread has announced plans to cut around 3,800 jobs in the UK and Ireland as part of a new five-year strategy to reduce costs and overhaul its restaurants. The hospitality giant said it will replace its remaining 197 branded restaurants with hotel-integrated food and beverage offerings, which it said was more efficient and preferred by hotel guests.
Whitbread said the plans to reduce its 30,000-strong workforce were subject to employee consultation, and that it expects to retain a significant proportion of those affected through redeployment. The move comes as Whitbread battles rising costs after the UK’s latest budget piled pressure on its finances, leaving the company scrambling to protect profits and boost margins. Bosses have already begun converting underperforming restaurant sites into hotel rooms in a bid to drive returns, with the latest overhaul marking a major escalation of those efforts. The strategy shift also follows mounting pressure from activist investor Corvex Management, which called on the company late last year to review its approach and unlock greater value.
A surge in energy prices triggered by the war in the Middle East is set to heap even more pressure on Britain’s battered hospitality sector, which is already grappling with sluggish consumer spending and spiralling costs.
Whithread’s plan, – targeting a huge £2 billion in free cash flow for shareholder returns by the 2031 financial year – hinges on a major asset shake-up, with £1.5 billion worth of freehold property set to be recycled to bankroll future growth.
It also includes slashing gross capital expenditure by £1 billion, with net annual spending cut back to between £200 million and £250 million in a bid to tighten the purse strings and boost returns.
The move will see its freehold property mix shrink sharply to between 30% and 40%, down from around 50% at present, as it shifts towards a more ‘asset-light’ model to drive returns.
Other major hotel chains, including Hilton, Travelodge and Marriot also operate an ‘asset-light’ where they don’t own the majority of the properties they manage, however Whitbread owns the freehold on roughly half of the more than 850 hotels it runs across the UK and Germany.
Chief executive Dominic Paul said: “We always challenge ourselves to improve and, in light of significant cost increases in the form of business rates and national insurance, as well as the implied market discount to our inherent value, we’ve looked hard at the options open to us to maximise value creation over the medium and long-term.
“This has been a rigorous process and we’ve approached all options with an open mind. Our new five-year plan builds on our strengths and drives a significant acceleration of our strategy.”
Whitbread said the move will reduce adjusted pre-tax profit by £10 million this financial year as it transitions sites in the second half of FY27.
A spike in energy prices driven by the war in the Middle East is set to add further strain on Britain’s hospitality sector, which is already facing weak consumer spending and rising costs.