PUBS and hotels group Whitbread has rejected speculation that it planned to demerge its chain of David Lloyd fitness clubs.

It said the leisure chain, which has 57 clubs in the UK and Ireland, including Teesside and Newcastle, was an excellent business that it would continue to invest in.

Whitbread was responding to a weekend report that it was considering demerging the business before seeking a separate stock market listing.

Chairman Sir John Banham said: "Whitbread has no plans to sell or otherwise dispose of its interest in David Lloyd Leisure."

David Lloyd started as a fitness club near London's Heathrow Airport in 1982. Whitbread bought it after it had expanded to 14 clubs in 1995. Today, there are 57 sites in the UK and eight in Europe.

Whitbread's other brands include the Marriott and Premier Travel Inn hotels and its Brewers Fayre and Beefeater pub chains.

It recently agreed to sell its three-star Courtyard chain to investment group Chiltern Mondiale for £79m as it moved to focus on its budget and luxury chains.

The company is also moving its head office to Bedfordshire after spending 254 years in London.

In October, it reported a nine per cent rise in half-year profits before tax and exceptional items to £147.4m.