Premier Inn Owner Criticizes Budgets as Hostile to Hospitality Sector

Dominic Paul, chief executive of Whitbread, the owner of Premier Inn, has labeled the last two government Budgets as the most "unfriendly to hospitality" the industry has ever experienced. Paul reiterated calls to reverse recent National Insurance changes and freeze business rate hikes for hotels, arguing that these measures hinder job creation and increase operating costs.

Paul stated that the surprise increases in business rates, coupled with rising wages and National Insurance contributions for employers, have made it "really hard to create as many jobs as we want." Whitbread's business rates bill is projected to double to £200 million by 2028, a situation he described as having "hammered" the sector over the past two fiscal plans.

He urged for a freeze on anticipated business rate increases for hotels over the next two years, deeming them "punitive." Paul expressed support for the government's broader agenda of economic growth and job creation, but emphasized the need for government assistance to achieve these goals. While pubs and live music venues are set to benefit from reduced business rates from next spring, hotels have faced increasing bills.

Additionally, Paul criticized the proposed visitor levy, which would charge tourists for overnight stays in the UK. He described it as "further taxation on hardworking, highly taxed people" without clear evidence of how the funds would be utilized, calling it an "inefficient way of taking money from the general population."

Whitbread's financial performance has been impacted by these pressures. The company reported a 62% drop in profits for the six months ending August 27, falling to £109 million. This decline was attributed to restructuring costs and higher operating expenses, despite strong sales.

The company has also been dealing with shareholder activism, urging investors to reject attempts by US hedge fund Corvex to secure a board seat. Corvex, which holds approximately 6.4% of Whitbread's shares, has proposed splitting the company into separate hotel operations and real estate entities, a move Paul deemed "not credible" and a "distraction."

In April, Whitbread announced plans to close its restaurant business, a move that could affect 3,800 jobs in the UK and Ireland, and revealed its intention to sell and lease back £1.5 billion of its freehold properties.