Budget hotel chain Premier Travel Inn is joining forces with Paramount Restaurants in a deal which will see a Caffé Uno restaurant open at its new Hampstead hotel, and potentially across the portfolio.

The hotel, previously a Holiday Inn, is undergoing a refurbishment and will reopen officially in August.

Paramount, which also operates high-street brands Chez Gérard, Bertorelli and Livebait, will lease and manage the 80-seat restaurant, provide the investment capital for development and will also deliver the hotel breakfast to guests.

Paramount chief executive Nick Basing said: "We are thrilled to partner our brands, Caffé Uno and Brasserie Chez Gérard, with Premier Travel Inn. I expect it will be the start of a fruitful relationship for many years to come. Hotel-based restaurants are a key strategic channel to expand our brands."

The deal builds on Paramount's previous tie-up with hotel operator Thistle, which saw the launch of a 100-seat Chez Gérard restaurant in London's Thistle Victoria hotel, located at Victoria Station, in March 2005. No further Thistle sites have been developed.

Paramount paid The Restaurant Group £33m for 53 Caffé Uno sites last December in a deal Basing described as a "part-property play, part recovery plan" for the high-street brand.

• Whitbread's Costa has signed an exclusive deal with supermarket giant Tesco to install coffee shops into a number of stores. Costa, which recently opened its 430th site, will open coffee shops in Tesco's St Ives, Cornwall; London Kensington and Hove, West Sussex supermarkets. The Whitbread-owned company is taking on Tesco's existing coffee shop staff as part of the deal.

By Chris Druce