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Investing.com -- Shares of U.K. hospitality group Whitbread PLC (LON:WTB) fell on Friday after Bernstein downgraded the Premier Inn owner to Underperform from Outperform and slashed its price target to 2,500 pence from 3,600 pence, citing a significant impact from U.K. business rates changes.
The downgrade follows the U.K. government’s release of updated rateable values on England properties, which showed an approximately 170% increase for Whitbread’s hotel portfolio.
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Shares of Whitbread fell 4.4% in Friday morning trade.
Bernstein estimates this could impact the company’s profit before tax by up to £30 million in 2026/27 and £90 million in 2027/28, representing a 15% reduction to previous estimates.
Most of Whitbread’s properties will now exceed the £500,000 hospitality relief limit, meaning they will pay the full business rates multiplier. The Manchester Piccadilly Premier Inn is set to experience a 385% increase in rateable value, according to Bernstein’s analysis of 67 Premier Inn hotels.
While Whitbread can appeal these new rateable values, Bernstein notes this process cannot begin until April 2026, likely forcing the company to guide to the full effect in January 2026.
The firm expects earnings per share to grow at just 5% over the next two years, compared to previous double-digit growth projections.
Bernstein reduced its target multiple to 8x from 9x, calling the business rates change "a hammer blow given the recent inflection in trading" that has "derailed" Whitbread’s five-year plan.