Whitbread, the owner of Premier Inn, has cautioned investors that upcoming changes to the United Kingdom’s property tax system will significantly increase its operating costs next year.

The company said that recently updated business-rates valuations on hotels across its estate point to a steep rise in liabilities, with many properties experiencing triple-digit increases in their assessed taxable value.

Early modelling suggests the new tax burden could amount to between £40 million and £50 million in the next financial year.

The hotel group explained that the recalculated rateable values push a large portion of its UK portfolio well above the thresholds needed to qualify for relief, leaving even previously lower-valued hotels exposed to higher taxes.

In several cases, Whitbread reported increases in rateable value of more than 300%, creating what it described as an unexpected and disproportionate spike in fixed costs.

The warning sent Whitbread’s shares sharply lower as analysts reassessed the near-term outlook for the business.

Some noted that although Whitbread remains a market leader and continues to outperform many of its peers in occupancy and revenue, the new tax obligations threaten to erode margins at a time when the hospitality sector is already wrestling with wage pressures, elevated energy prices and uneven consumer demand.

Despite the immediate challenges, the company reaffirmed guidance for the coming year and highlighted ongoing efficiency programmes designed to offset inflation.

Whitbread also said it remains confident in its long-term strategy, including expansion plans in Germany and continued investment in its UK estate.

However, the financial impact of the revised property-tax framework underscores the broader vulnerability of the hospitality industry to shifts in fiscal policy, particularly when fixed-cost pressures are already mounting.