Whitbread unveils £800m disposal programme to boost dividends

Whitbread, the hotels and leisure group, said yesterday it would sell off at least £800m of assets, pledging to return half of it to shareholders in an effort to improve returns at the group.

Whitbread, the hotels and leisure group, said yesterday it would sell off at least £800m of assets, pledging to return half of it to shareholders in an effort to improve returns at the group.

News of the asset sale came as Whitbread, which owns Marriott hotels, Costa Coffee, Pizza Hut and Beefeater, announced a 9.4 per cent rise in first-half profits to £147m. Like-for-like sales were up 3 per cent over the year.

Alan Parker, who took over as chief executive of the group in June, said the company's assets were only just covering their cost of capital.

The £800m sell-off includes half the group's UK Marriott hotels for about £500m, £200m from the planned flotation of the soft drinks group Britvic, where it has a 23.75 per cent stake, as well as the sale of its German business and about 50 poor performing pubs.

Whitbread plans to sell the property assets of its Marriott hotels, but retain a management contract to run them. About 12 will be sold on this basis this year, with another 12 planned for next year, leaving Whitbread with about 30 fully owned Marriotts.

Budget hotels now account for the largest part of the group, after the £505m acquisition of Premier Lodge in July. Whitbread plans to build about another 25 budget hotels a year.

The group said it was also planning 100 new pub restaurants under the Brewers Fayre brand over the next three years, as well as 10 David Lloyd leisure clubs.

The company said it would sell off its historic brewery in the City of London in Chiswell Street, where Samuel Whitbread began brewing beer in 1750. This could be worth as much as £20m.

But despite the prospect of increased dividends and £30m of cost savings, its shares fell 2.5 per cent yesterday to 810.5p, as shareholders were disappointed that the asset sale was not bigger.