Shares in Whitbread Plc fell sharply on Friday on a broker downgrade and the Premier Inn owner's forecast that increases in property taxes introduced in the Budget would cost an extra £40m-50m in 2027.
The stock was down as much as 9% in morning trade before settling 5% lower at midday after the company held full-year guidance in a trading update. Bernstein cut its rating to 'underperform' from 'outperform' and took a knife to the target price, marking it down to 2,500p from 3,600p.
Whitbread said that, including the estimated impact of the UK Budget and business rates, it now expected gross UK cost inflation to be between 7% - 8% on its £1.7bn UK cost base.
However, with accelerated efficiencies of £60m, net UK cost inflation was now expected to be between 3.5% and 4.5%.
It added that the return to market growth in the UK had continued into the third quarter with positive revenue per available room growth and forward bookings ahead of last year.
"In Germany, market demand has stepped up since the second quarter, supported by a strong events calendar, and we continue to outperform the market," the company said in a statement on Friday.
"There is no change to our previously announced FY26 guidance and we remain confident in the full year outlook."
Reporting by Frank Prenesti for Sharecast.com