Like-for-like sales at hotel chain almost ground to a halt in six months to 30 August

Premier Inn’s owner, Whitbread, is planning a major push into the German hotels market after the sale of its Costa Coffee business to Coca-Cola.

Alison Brittain, Whitbread’s chief executive, said the company would plough some of the proceeds from the agreed £3.9bn sale into expanding its hotels business but a “significant proportion” of the money would be returned to shareholders.

Whitbread is rolling out its Premier Inn chain in Germany, where it has one hotel in Frankfurt, with more hotels to open in Munich and Hamburg in the coming months. It expects to have 33 hotels with 6,000 rooms in Germany by 2021, which would make it one of the biggest budget hotel operators in that country.

It said the German hotel market was 35% larger than the UK’s and similar to the UK a decade ago, as a shift from independent hotels to branded hotels gets under way.

Like-for-like sales at Premier Inn almost ground to a halt in the six months to 30 August, rising only 0.2% as consumer demand softened over the summer. Bookings from leisure travellers weakened outside London but this was offset by demand from business customers. More than 80% of its rooms were occupied over the period.

Nicholas Cadbury, Whitbread’s finance director, said weekend bookings had been weaker than midweek bookings into September, reflecting the weaker consumer backdrop.

As well as growth in Germany, Whitbread will focus on a UK “super budget” hotel brand, Zip, launched on Monday. Zip will be a spin-off from its main Premier Inn brand, featuring pod-style rooms half the size of a Premier Inn room at only 8.5 sq m and priced from £19 a night. The first hotels are due to open in Cardiff and Southampton next year.

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Brittain said Zip would be aimed at people for whom Premier Inn’s £49-plus room rates are too expensive and are currently staying at B&Bs, sleeping in their vans or on friends’ floors, or driving long distances. She said this market could be worth £1bn a year.

At the same time Whitbread plans to add a further five to six boutique hotels under the hub brand to the existing 10, most of them in London and with the rest in Edinburgh. Hub rooms cost from £69 a night and feature bespoke Hypnos beds, a choice of pillows, monsoon showers and 40-inch TVs.

Whitbread is the biggest hotel operator in Britain, with 800 budget hotels and 74,000 rooms, and hopes to get to 100,000 rooms in the next few years. Its main rival, Travelodge, runs 560 hotels. Whitbread – a 276-year-old business – also operates restaurant brands including Beefeater and Brewers Fayre that serve its hotels.