By Marcus Leach

Signs of weaker demand for hotel bookings have knocked Whitbread shares despite a trading revival at its Beefeater and Brewers Fayre chains.

Whitbread's Premier Inn arm, which has 590 hotels and 43,000 rooms in the UK and Ireland, saw like-for-like sales grow 2.6% in the 13 weeks to December 1, against 4.3% for the first 39 weeks of its financial year.

It said it continued to outperform the market after industry data showed growth in the London market stalled and disappeared completely in the regions.

However, shares fell by as much as 5% after the update fuelled concerns about the impact of economic turbulence and chief executive Andy Harrison admitted trading on a month by month basis remained variable.

Coffee chain Costa, the current top performer in the leisure group's portfolio, also saw weaker like-for-like growth although further store openings kept the brand's overall sales rate at 25.2% higher for the third quarter.

Its restaurants ended a period of sales decline after a new management team overhauled menus and rolled out more promotional offers, such as main meals from £4.99 at Whitbread's Beefeater and Table Table outlets.

Like-for-like sales were 1.1% higher in the 13 weeks to December 1, compared with 0.7% for the 39 weeks of the financial year to date.

Mr Harrison added: "Restaurants have responded positively to the actions we are taking to improve performance."

Whitbread said its performance kept it on track to meet market expectations for the year to February. Numis Securities is currently looking for profits of £314.7 million, compared with £287.1 million a year earlier.

It expects to open 4,000 new rooms and 300 Costa stores during the current financial year, creating an estimated 2,500 jobs. There are currently 1,352 Costa stores in the UK and 381 pub restaurants.

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