Private-equity firm Permira is reportedly putting Travelodge, the budget hotel group, up for sale for an estimated £1bn.

According to the Financial Times, Whitbread may have already started work on a possible bid. Permira will be appointing advisors, and held talks with investment banks Citigroup, Deutsche Bank and UBS and a decision is to be made in the next few weeks.

The 291-hotel chain recently launched a price war against Whitbread’s Premier Travel Inn, and plans to expand its 17,000-room estate by 3,000 rooms every six years. Similarly, Whitbread aims to increase Premier Travel Inn’s 30,000 rooms to 45,000 by the end of 2010.

Permira bought Travelodge in 2003 from catering company Compass for £712m, in a deal which included the Little Chef chain. Permira then sold Little Chef last year for £52m to The People’s Restaurant Group, owned by restaurant entrepreneurs Simon Heath and Lawrence Wosskow.