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Premier Inn owner Whitbread upbeat on profit as sales climb

(Adds detail, comment)

By Neil Maidment

LONDON, Feb 25 (Reuters) - Britain's Whitbread expects to post full-year profit towards the top of market forecasts after strong demand at its Premier Inn hotels and Costa Coffee chain helped to deliver a 5.8 percent rise in like-for-like fourth-quarter sales.

The group, which also runs pubs such as Brewers Fayre, said on Wednesday that strong demand throughout the country had pushed like-for-like sales up 8.6 percent at Premier Inn, with group revenue per available room -- a key industry measure -- up 8.9 percent and occupancy for the year at a record high.

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Same-store sales at UK Costa stores rose 6.9 percent in the 11 weeks to Feb. 12, Whitbread (LSE: WTB.L - news) 's financial fourth quarter.

"Premier Inn and Costa continue to grow rapidly, winning UK market share, with Premier Inn also benefiting from the recovery in the UK regional hotel market," Whitbread Chief Executive Andy Harrison said.

Analysts had forecast Whitbread's 2014/15 pretax profit in a range of 437 million pounds ($679 million) to 495 million pounds, with the average estimate at 472 million pounds, according to Reuters data.

Shares (Frankfurt: DI6.F - news) in the FTSE 100-listed firm, which have risen 22 percent over the past year, gained 2 percent to 52.05 pounds in early trade on Wednesday.

Whitbread has grown rapidly in recent years on demand from cost-conscious customers for affordable hotels and a trend for takeaway coffee, with an improving British economy now providing added momentum.

To capitalise, the group wants to expand Premier Inn to 75,000 rooms by 2018, up from about 56,700, and to double Costa's sales to 2 billion pounds through expansion at home and abroad, particularly in China.

Whitbread said that 5,500 hotel rooms would be added this financial year, against 4,500 in 2014/15, with net new Costa stores rising from 230 to 250 worldwide.

The company said that capital investment would rise to 700 million pounds, from 575 million pounds in 2014/15, as it strengthens its freehold hotel pipeline, particularly in London.

Some analysts expect Whitbread to demerge Costa, which has about 1,750 British stores and 1,100 more overseas and has been valued at around 3 billion pounds. However, Harrison told Reuters that the group remains focused on expanding the chain.

"Costa will continue to create very substantial shareholder value through profitable growth, and that's what we are concentrating on," he said. ($1 = 0.6440 pounds)

(Editing by Kate Holton and David Goodman)