Further expansion of the budget hotel brand Premier Inn has been signalled after parent Whitbread revealed high occupancy levels.

In a half-year trading update the company, which also owns Costa Coffee, said occupancy levels were above 80% in the regions and 85% in London in the six months to August.

However although revenue per available room [RevPAR] was up 1.8% growth in this key performance indicator was lagging behind rivals in the midscale and economy market.

Chief executive Alison Brittain said she was particularly pleased with how Premier Inn had performed during the six month period.

“We are opening 10,000 hotel rooms in two years, which is like an entire hotel chain. We are happy to open new rooms because we are full.

“RevPAR is just one data point and we don’t even incentivise it in terms of performance within the company – it’s not an important part of how we drive the business.”

Occupancy rate and average room rates rise of 2.8% to £65.26 saw Premier Inn pre-tax profits rise more than a quarter to £295 million.

With growth in sales at Costa Coffee under expectations the group reported that pre-tax profits were up a fifth to £316 million.