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Hotel and pub group Whitbread said sales rose in the first quarter as businesses looking to cut costs took advantage of its budget rooms.

Premier Inn like-for-like sales increased 10.7 per cent over the 13 weeks to May 29th. Whitbread said the figures show its hotel chain continues to outperform the market.

In a conference call with reporters, Alan Parker, Whitbread's chief executive, said: "There are clear signs that the corporate traveller is getting more savvy and recognising value for money."

Like-for-like sales at Whitbread's pub restaurants, which include Beefeater and Brewers Fayre, were up 3.6 per cent over the period.

Although food inflation has put pressure on margins, Whitbread said it is responding to the credit squeeze by introducing less expensive meal options.

Coffee chain Costa had a strong sales performance, Whitbread said, with like-for-like sales up six per cent.

Mr Parker said: "The attractiveness of our brands to guests has been demonstrated by our good performance to date.

"We remain cautious, however, should the consumer environment become more challenging."

Like-for-like sales overall were 7.1 per cent, the company said, while total sales rose 14.6 per cent overall.