Whitbread CEO Dominic Paul has pushed back against calls from activist investor Corvex Management to reduce UK capex saying it ‘would not be the right thing to do’.
In an investor call following the publication of its Q1 results yesterday (18 June), Paul said investing in and growing the group’s UK hotel estate, particularly in London, was the right course with sites ‘generally profitable from day one’ and driving ‘very high returns’.
“In terms of reducing UK capex further, we think the plan we’ve laid out is the right plan,” he said.
“We are focused very much on opening hotels, which are going to be very high returning.
“A lot of our future growth, as we laid out, is coming in London, where currently we’re under index.”
Paul pointed to the group’s Q1 results, which show a strong performance in London with total accommodation sales up 7% and RevPAR up 4%.
“London continues to do really well,” he continued.
“We feel very positive about adding this capacity in London. Stopping that kind of investment would not be the right thing to do.
“These hotels are generally profitable from day one and drive very high returns.
“We’re very comfortable about investing that money in the UK.”
In a letter seen by MCA, US-based Corvex, which manages funds that have an economic interest in over 11.8 million shares of Whitbread, representing an approximate 7% interest in the total shares outstanding, said a sale of the Premier Inn owner is the ‘only credible path to unlocking shareholder value’.
It also took aim at the group’s recently announced five-year accelerating growth plan (AGP), which will see it exit all remaining branded restaurants in the UK to become a pure-play hotel business with a more efficient integrated F&B format.
As part of the strategy, Whitbread will reduce the overall portion of owned properties across its portfolio from 50% to 30%, describing it as ‘unacceptable’ and ‘value destructive’.
Asked directly about Corvex’s intervention, Paul said Whitbread had spent a lot of time speaking with shareholders, both before and post the announcement of the AGP, and that generally they have been ‘really supportive’.
“[They have been] very understanding of the fact there have been some macroeconomic shocks, particularly on business rates and some of the other increase, but also I think very pleased that we’re taking pretty radical action in terms of extending our AGP to become a focused hotel business, reducing our gross capex overall, recycling more of our freehold property to fund future growth.”
Alongside the group’s new plan for the German market, which will see it become more leasehold focused, he said the AGP presented ‘a very strong set of actions to drive very material increases in profit and returns’.
“Obviously, this year is a challenging year because extending our AGP means we have to go a bit backwards in order to go significantly forward.
“Investors with a medium-term timeframe are understanding of that and do believe we’re making the right kind of decisions.”
Whitbread reported a 2% rise in total group sales to £727m in the first quarter of FY27, covering the 13 weeks to 28 May 2026.
The group saw positive trading performance in its Premier Inn UK estate with total accommodation sales up 3% versus last year and total RevPAR up 2%.
Premier Inn Germany saw total accommodation sales up 13% in local currency over the quarter (up 16% in GBP), led by continued estate growth and the benefit of commercial initiatives.
Total estate RevPAR in the territory was €63 and RevPAR of its more established hotels was €73, significantly ahead of the wider M&E market that was impacted by a lower number of high impact events this year.
“Fundamentally, what we’re really confident in is the plan that we’ve laid out is going to drive very significantly increased returns and profitability of the medium term of the business,” Paul said.
“It’s important that we both keep reinforcing that, but also show the momentum that we’re building in the business.
“Although it’s only the first quarter, this first quarter points to that. I think it’s our third consecutive quarter of RevPAR growth. It shows the momentum building, both in terms of the underlying trading driven by our commercial program, the progress we’re making on accelerating growth, and the progress we’re making in Germany overall.
“We’re very focused on delivering that plan, and we’re making good progress.”
