Whitbread plans expansion of Costa Coffee and Premier Inn chains

Despite the credit squeeze, demand for budget hotel rooms and cappuccinos has remained strong which has led to Whitbread planning to double the size of its Costa Coffee chain and expand Premier Inn by 50% over the next 5 years.

The pub restaurant and budget hotel operator has announced it will build at least 100 more Premier Inns next to its Beefeater and Brewers Fayre pub restaurants by 2013, and have 55,000 rooms globally.

It currently owns 518 Premier Inn hotels with 36,000 rooms, making it the biggest hotel chain in the UK.

Whitbread also has 992 Costa coffee shops worldwide with 695 in the UK. The company aims to double that figure to 2,000, with half the new shops in the UK.

Whitbread has today posted its results and in the first 2 months of the company’s financial year, like-for-like sales rose 5.7%.

Pre-tax profits before exceptional items rose 26.3% £210.3 million for the 12 months to end of February, exceeding analysts forecasts of £208 million.

In mid-morning trading today, shares in the company increased 4.3% to £12.39, making it one of the best performers on the FTSE 100.

In a ‘buy’ note, Panmure Gordon analyst, Douglas Jack, said final results are strong, driven by strong like-for-like sales and expansion.

The company should continue to outperform most other leisure companies over the medium-term due to its low gearing and ability to drive Premier Inn and Costa expansion, like-for-like sales and remove pub restaurant costs, added Mr Jack.

The company is valued at £2.19 billion.

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