A £900 million asset swap of hotels and pubs between Whitbread and Mitchells & Butlers could be on the cards - the first in the next wave of consolidation likely to hit the sector.

With Whitbread looking to expand its budget hotels arm and M&B seriously thinking of exiting that industry, analysts say a deal is logical and that property tycoon Robert Tchenguiz would back the plan.

Asked today if he would consider the move - proposed by Citigroup - Whitbread boss Alan Parker said: "I read the note with a great deal of interest. If M&B put their hotels up for sale we would have to look at it."

M&B said recently it was thinking of offloading the hotels, which include the InnKeepers Lodge brand. M&B is the third-biggest budget hotel player, but hotels account for only 5% of its sales.

Whitbread has 400 pub restaurants, but they are seen as the least important arm of a sprawling business that includes the Costa Coffee chain and the Premier Inn group.

Citigroup analyst Leslie Zarka said: "M&B would be a better operator for Whitbread's pubs and Whitbreadwould be a better operator for M&B's InnKeeper lodges."

Citigroup puts a £700 million price tag on Whitbread's pubs and says M&B's hotels are worth £200 million. That would leave M&B handing over £500 million if an asset swap took place.

M&B boss Tim Clarke is known to have expressed an interest in the Whitbread pubs in the past. The company had no comment today, but insiders acknowledge the idea has legs.

Given M&B's recent financial difficulties - it wrote off £274 million after a disastrous property hedge fell apart - he may simply decide to cash in on the hotels.

Robert Tchenguiz, who owns 27% of M&B and 3% of Whitbreads, would probably push for a deal.

With pub companies battling rampant inflation and plunging consumer confidence, a raft of deals could be on the way. Analysts expect a tie-up between Greene King and Marston's.

Whitbread today unveiled like-forlike sales up 7.1% for the 13 weeks to end of May. Premier Inn is booming at 10.7%, Costa Coffee very strong at 6% and the pubs the weakest at 3.6%. Premier Inn is now two-thirds of the group.

Parker said: "It is quite a deliberate strategy to focus on the core budget hotel businesses. People are finding the value for money that Premier offers very attractive."

Parker is predicting that food inflation will run at 8%, while energy costs will rise 22% this year.