Whitbread's UK like-for-like sales grew by just 0.3% in the third quarter as its Premier Inn hotels and Costa cafes struggled amid tougher market conditions.
Like-for-like sales at Premier Inn edged up 0.5%, driven by a 1.8% increase in sales in the restaurants division. Hotel sales were flat.
Whitbread said there were signs of market weakness, most notably in London, with year-on-year declines in both occupancy and average room rates.
It said early performance in the fourth quarter is showing a general improvement.
Total revenue at Premier Inn UK increased by 5%, but the International division plummeted by 46.5% because of exiting underperforming hotels in India and Southeast Asia.
At Costa, like-for-like sales slipped by 0.1%. Although UK Express sales rose by 6.7%, UK equity stores declined by 1.5% because of weakening footfall.
Total revenue growth at Costa was 7.2%.
Alison Brittain, Whitbread chief executive officer, said: "Our Costa high street stores in the UK are highly profitable and generate strong returns. However, the well-publicised weak retail market footfall is negatively impacting our high street stores' like-for-like performance and we expect this to continue for some time. Internationally, Costa in China continues its good momentum with another quarter of positive like-for-like sales growth.
"We remain committed to delivering our strategy to invest in the attractive structural growth opportunities in the budget hotel market and the growing coffee markets, in both the UK and internationally. We do expect the tough UK high street environment and inflation in our sector to continue to pose challenges in the year ahead. However, we have good momentum in the delivery of our plan to enhance our UK market leadership positions, create an international business of scale in Germany, China and Costa Express, and develop a more efficient infrastructure. This will create further customer loyalty and deliver long-term growth in earnings and dividends and a strong return on capital."