Peel Hunt upgrades Whitbread to 'buy'

"We believe that demand for UK budget hotels remains very strong with leisure and ‘blue collar’ demand particularly robust and ‘white collar’ demand still recovering," it said.

"In terms of costs, we believe that we are past the worst in terms of labour cost inflation and there is some upside from lower energy costs, although not this year which is 75% hedged."

Peel Hunt said that in the medium term, it reckons investments in technology will pay off in the form of higher revenue, from offering more room price points more dynamically, and more efficient marketing, from targeting it where data shows it will get the best return.

In the longer terms, it expects Premier Inn in Germany to prove its investment case by becoming the largest hotel chain in Germany and a material contributor to profit.

At 1055 BST, the shares were up 2% at 3,076.00p.