Premier Inn owner Whitbread has fought off pressure from an activist investor after shareholders rejected its bid for a board seat. 

The FTSE 100 hospitality firm hailed the “decisive” victory and said it would now ramp up efforts to deliver on its turnaround plan, which saw the group sell off all of its restaurants as it seeks to return £2bn to investors.

Corvex Asset Management, one of Whitbread’s biggest shareholders, had been pushing for James Gemmel, one of its directors, to take a board seat to halt the firm’s “chronic misallocation of capital”. 

The investment firm took issue with the hotel group’s £1.1bn expansion into Germany and had been calling for a “rigorous, fact-based review” of how the company spends its money. 

But Corvex has failed to win over Whitbread’s shareholders. More than 83 per cent of votes were cast against the motion to appoint Gemmel to the group’s board, which took place at a general meeting on Monday. 

Shares in Whitbread lost 1.9 per cent, to 2,774p immediately following the result, though the stock has gained about 19 per cent in the last six months.

Christine Hodgson, Whitbread’s chair, thanked the “overwhelming majority” of the group’s shareholders for voting “decisively” in line with its board.

She said: “We will now continue to focus on delivering our Five-Year plan, which has clear and measurable milestones to drive significant value for shareholders, and which we are already executing at pace. 

“With this plan, we are on course to deliver a step change in margins, cash flows and returns”.

In April, Whitbread set out plans to sell off all of its standalone restaurants, which included the Beefeater and Brewers Fayre chains, and cut nearly 4,000 jobs.

Whitbread ‘anchored to status quo’

The group said the measures, as part of its new five year plan, were taken in response to the “unexpected” impact of business rates, as the Budget sent tax bills soaring for thousands of hospitality companies.

The firm is also seeking to raise £1.5bn by selling the freehold rights to more of its hotels. Whitbread operates about 850 Premier Inn hotels across the UK. 

Whitbread had opposed Corvex’s calls for a fresh review of its strategy, saying that these plans to flog its restaurants and freehold rights had only just been put together. A new review would be a “complete waste” of time and money, the firm had said. 

Urging shareholders to hand Gemmel a board seat, Corvex managing partner Keith Meister had said: “Whitbread’s persistent structural complexity and chronic misallocation of capital have delivered double-digit negative returns across every reasonable investment horizon – one, three, five, and ten years.

“We have raised these concerns directly and repeatedly with the Board and management, yet rather than undertaking the substantive strategic change the situation demands, they have remained anchored to the status quo.”