Whitbread plc (LSE:WTB) has welcomed changes to business rates announced in the UK Government’s 2026 Budget, estimating that the measures could reduce its annual business rates payments by between £45 million and £60 million against previous expectations by the 2029 financial year.
The Premier Inn owner said the Government’s decision to limit business rates increases for hospitality properties in England over the next two years would significantly reduce the additional costs previously anticipated by the group.
Under the revised measures, Whitbread now expects its business rates bill to increase by between £7.5 million and £12.5 million in FY2028, compared with a previously expected increase of approximately £35 million.
The company anticipates a similar benefit in FY2029, although it cautioned that its estimates remain preliminary pending publication of the full details of the Budget measures.
Business Rates Changes Reduce Expected Cost Increases
The UK Government has announced measures designed to limit increases in business rates for hospitality businesses in England.
Under the proposals, business rates will be frozen for two years in a way that prevents hospitality properties from facing increases above the rate of inflation.
Whitbread expects the changes to reduce the financial impact of business rates increases that had previously been anticipated across its UK operations.
The company estimates that its total business rates payments will now rise by between £7.5 million and £12.5 million in FY2028.
This compares with the previous consensus expectation of an increase of approximately £35 million.
Based on these estimates, the revised measures could reduce the additional annual cost burden in FY2028 by approximately £22.5 million to £27.5 million compared with earlier expectations.
Whitbread expects a similar benefit in FY2029.
The group stressed that the figures are preliminary and may change once the full details of the Government’s measures become available.
Annual Business Rates Bill Could Be £45 Million to £60 Million Lower by FY2029
Whitbread estimates that its annual business rates payments in FY2029 could be between £45 million and £60 million lower than previously anticipated.
The projected reduction reflects the cumulative effect of the changes over the two-year period.
The company expects the revised business rates framework to have a significant positive impact on its financial performance.
Business rates represent an important operating expense for hospitality businesses with extensive property portfolios, including Whitbread’s Premier Inn hotel network.
Limiting increases in these costs could help reduce pressure on operating margins and support cash generation.
However, the company has not yet provided revised earnings or profit forecasts incorporating the measures.
Whitbread intends to assess the final regulations before updating its financial guidance.
National Living Wage Changes Also Welcomed
Alongside the business rates measures, Whitbread welcomed the Government’s approach to increases in the National Living Wage and National Minimum Wage.
The company said the announced wage increases were more manageable than those introduced through previous Budgets.
Labour expenses and property-related costs are significant components of the hospitality sector’s operating cost base.
Whitbread believes the combination of moderated business rates increases and changes to minimum wage requirements will help mitigate some of the cost pressures facing its business.
The company has not disclosed a separate financial estimate for the impact of the wage measures.
Budget Measures Support Whitbread’s Five-Year Plan
Whitbread said the anticipated reduction in business rates costs would provide additional support for its existing Five-Year Plan.
The strategy is intended to deliver improvements in operating margins, cash flow and shareholder returns.
Lower-than-expected property-related cost increases could contribute to those objectives by reducing the amount of additional expenditure the company must absorb over the coming financial years.
Chief Executive Officer Dominic Paul welcomed the Government’s decision.
“The business rate measures announced in the UK Budget will do much to mitigate the damaging impact of the past two Budgets on the hospitality sector, and we are grateful that the Government has listened to our concerns. Limiting the increase in business rates over the next two years to inflation, together with a more reasonable increase in the national living wage and national minimum wage, will make a significant difference to our business. This provides further momentum as we execute our Five-Year Plan which is on track to deliver a material increase in margins, cashflow and returns for shareholders.”
The company indicated that the Budget measures could provide further momentum for its existing financial and operational objectives.
Updated Cost Inflation Guidance Expected in January 2027
Whitbread plans to provide updated guidance on UK cost inflation for FY2028 alongside its third-quarter FY2027 trading update in January 2027.
The guidance will incorporate the company’s assessment of the UK Budget measures, including their expected impact on business rates.
Until then, the group will continue reviewing the details of the Government’s proposals and their implications for its property portfolio.
The financial benefit will depend on the final implementation of the announced measures and the resulting business rates calculations.
Whitbread Outlook
Whitbread expects the UK Government’s revised business rates measures to reduce its anticipated operating cost increases over the next two financial years.
The group currently estimates that business rates payments will increase by between £7.5 million and £12.5 million in FY2028, substantially below the previously expected £35 million increase.
By FY2029, annual business rates payments could be between £45 million and £60 million lower than earlier projections.
The anticipated savings would provide additional support for Whitbread’s Five-Year Plan, particularly its objectives of improving margins, cash flow and shareholder returns.
Further clarity is expected in January 2027, when the company plans to publish updated UK cost inflation guidance incorporating the Budget measures.
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