Corporate demand puts budget hotel chain in Premier league

Whitbread, the UK's biggest hotel operator, said it had seen a 20 per cent increase in corporate trade at Premier Inn in the 24 weeks to August 19 as business customers traded down from four and five star hotels.

Corporate customers account for nearly two thirds of Premier Inn's overall business.

Special offers from as little as 29 a night have also boosted occupancy at weekends and holiday periods as pressures on consumer spending encouraged holidaymakers to stay in Britain.

In addition the chain has benefited from a TV advertising campaign fronted by comedian Lenny Henry.

Premier posted a 10.7 per cent rise in like-for-like sales for the 24 weeks to August 19.

The hotel chain, which generates around two-thirds of Whitbread's profits, has also benefited from the use of "dynamic pricing" whereby rooms are priced according to demand.

Chief executive Alan Parker said: "We're taking market share both in the leisure and corporate market, but the continued drift of large corporations towards us has been a sustained trend over the last 12 months."

Whitbread, which also owns the Beefeater and Brewers Fayre pub restaurant chains, said like-for-like sales across the group were up by 7.9 per cent in the 24 weeks to August 19.

It reported further strong trading at its coffee shop chain Costa as new drinks and food offers boosted like-for-like sales by 8.3 per cent.

In the restaurant division, which includes Beefeater and Brewers Fayre, like-for-like sales rose 3.9 per cent thanks to value-for-money menus featuring traditional British dishes.

Mr Parker, who is due to step down as chief executive in November, said Whitbread re-mains confident over prospects for the remainder of the year, although it faces tougher comparisons with a year earlier.

He added: "We will continue to make progress in this age of austerity by relentlessly focusing on meeting the needs of our customers."

Whitbread opened nine new hotels with a total of 795 rooms during the financial year to date, with another 1,905 rooms planned for the rest of the period.

It has opened a net 98 Costa stores in the year to date, including 54 company-operated stores.

The company has appointed easyJet boss Andy Harrison as Mr Parker's replacement.

Langton Capital analyst Mark Brumby said: "The group continues to

deliver but its shares have moved to a deserved premium and we acknowledge there may be better value elsewhere."