Whitbread is to expand its budget Premier Inn hotel and Costa coffee arms as it looks to offset a weaker outlook in the restaurant sector. The Guardian. The Daily Telegraph. The Times. Financial Times

Reporting better-than-expected first-half figures, Alan Parker, Whitbread's chief executive, said the company plans to grow its Costa chain to 1,000 outlets by next March, up 40% year on year.

Whitbread will also its tie-up with Tesco and open Costa in 50 in-store shops and target further openings in retail parks and railway stations.

Parker said Premier Inn was ‘well positioned’ to outperform growth in the budget hotel market, where it is the biggest operator.

He said: ‘We have 13% of the UK market and will continue to grow market share. We expect the number of budget hotel rooms to double to about 180,000 within five years.’

However, Whitbread’s plan to return £800m-£1bn to shareholders by issuing bonds secured against its property portfolio is still on hold because of the credit crunch.