(Reuters) - Whitbread Plc <WTB.L> will buy back an additional £2 billion of shares using proceeds from its sale of the Costa Coffee chain to Coca Cola Co <KO.N>, the owner of Premier Inn said on Wednesday.
The group, which completed the $5.1 billion sale of Costa Coffee last month, has shifted focus completely to its hotels business.
In presentations for its annual Capital Markets Day, it also forecast a further 220 million pounds in savings over the next three years and predicted that its German operations would be profitable in fiscal year 2022.
Whitbread began a programme of share buybacks last month, targeting 500 million pounds in purchases. In Wednesday's presentations, it said it would now return at least 2.5 billion pounds to shareholders.
Investors have been looking for signs of an aggressive growth plan, with Whitbread flush with cash from the Costa sale. Analysts had long felt the coffee chain was dragging down Whitbread's overall business.
The company said in the presentation it was seeking to double its long-term network potential to more than 170,000 rooms in the UK and overseas.
It has been increasing its international presence, specially in Germany, and is targeting the UK budget market with "Zip" rooms that start from 19 pounds in an aim to boost revenue in its home market.
"Given the size of the market and level of fragmentation, Whitbread sees potential for at least 110,000 rooms in the UK," it said in a presentation to investors.
The company said it was targeting growth in Germany through investment in freehold and leasehold properties, combined with further acquisitions, to at least 60,000 rooms over the longer-term.
Whitbread has said previously that sustained inflation and a subdued UK environment posed a significant challenge and it also warned on costs on Wednesday, saying the inflation outlook remained challenging in the near term.
With Britain's exit from the European Union looming, lacklustre consumer confidence coupled with inflation is forcing Britons to rein in spending. Additionally, Premier Inn is facing increased competition from online platforms such as Airbnb and budget hotel platform OYO, which recently launched in Britain.
(Reporting by Sangameswaran S and Noor Zainab Hussain in Bengaluru; Editing by Sai Sachin Ravikumar)