Good Q1 performance with encouraging trading patterns continuing into Q2
Good Q1 performance with encouraging trading patterns continuing into Q2 Trading update for the quarter ended 31 March 2024
- Revenue growth supported by resilient customer demand: total revenue up 3.5% to £205.5 million (2023: £198.5 million) supported by demand from diverse range of leisure and business guests
- Continued investment to drive growth and quality: planned investments in advertising campaign, acceleration of refit programme and upgrade of property management system – delivering positive customer and commercial benefits
- Expansion of UK hotel network and growth in Spain: opened two new UK hotels in the year to date; doubled presence in Spain through recent acquisition of six Spanish hotels; Travelodge PropCo Group completed acquisition of 66 hotels from LXi REIT plc
- Momentum building into Q2: improving trading patterns with UK accommodation sales in last four weeks in line with 2023; positive forward booking patterns with booked revenue to end of Q3 (September 2024) ahead of 2023 levels
Jo Boydell, Travelodge Chief Executive, said: “Travelodge delivered a robust performance in what is typically a quieter quarter, supported by resilient demand from our diverse range of leisure and business customers who seek affordable, quality accommodation.
“We deliberately accelerated our refit programme ahead of the peak season and continued to invest in our successful advertising campaign and business system upgrades. These investments will drive growth and quality and are already supporting positive customer and commercial benefits.
“We are encouraged to see improving trading patterns over the last few weeks, with strong forward bookings supported by key events throughout the summer, including The British Grand Prix, Edinburgh Festival and The Open. Travelodge’s affordable proposition, together with our well-invested and diversified hotel network, positions us well to deliver long-term growth.”
21 May 2024 – Travelodge, the UK’s first budget hotel brand which operates more than 600 hotels, today announces its financial results for the quarter ended 31 March 2024. Travelodge delivered a 3.5% increase in revenue to £205.5 million (2023: £198.5 million), supported by resilient customer demand.
During the period, Travelodge invested in the business to drive growth and quality, including acceleration of its refit programme which is having positive commercial and customer benefits. Travelodge also continued investment in its advertising campaign which is positively impacting brand metrics, as well as an IT systems upgrade which is ongoing.
Excluding these investments and favourable energy hedging at pre-energy crisis levels last year, underlying EBITDA for Travelodge OpCo Group for the quarter was £11.4 million (2023: £13.0 million). For the Travelodge Group, which includes the benefit of Travelodge PropCo Group’s* acquisition of 66 hotels from LXi REIT plc, underlying EBITDA was £12.9 million.
The Q1 results – which are consistent with the competitive midscale economy segment and against strong 2023 comparatives – were supported by resilient demand from Travelodge’s diverse customer base of leisure and business travellers. Although there were fewer events in the period, leisure bookings were supported by Cheltenham Festival, the Six Nations Championship and various music concerts. Business travel demand benefited from face-to-face networking at industry events including International Confex, a two-day gathering for event organisers, Ice London, the gaming showcase event, and Oceanology International London, the industry event focused on ocean science and technology.
In current trading, the first weeks of Q2 have been impacted by the phasing of bank holidays, weather and fewer events but improving trading patterns have brought the last four weeks’ UK accommodation sales in line with 2023 levels. Forward bookings are also strong, particularly for key events such as the British Grand Prix, Edinburgh Festival and The Open, where bookings are exceeding expectations.
Continued investment to drive growth and quality
Travelodge continues to invest in the business to drive growth and quality, while enhancing its proposition of providing a well-priced, well-located stay that customers can trust.
In the quarter this included its advertising campaign – which is already having a positive impact on brand metrics – and the upgrade of its property management system.
The acceleration of Travelodge’s refit programme – its most significant brand transformation to date – continued to drive positive commercial and customer benefits. Travelodge accelerated the refit of London hotels in particular, ahead of the peak trading seasons.
Expansion of UK hotel network and growth in Spain
Travelodge opened two new UK hotels (185 rooms) in the year to date, in line with its expansion plans to open six UK hotels in 2024. This included the opening of its 600th hotel at London Oval Cricket Ground in February, offering 95 rooms and creating more than 30 jobs, as well as the Northern Gateway Leisure Park in Colchester in April, offering 90 rooms.
Spain continues to present significant development opportunities for Travelodge, with strong customer demand and low penetration of branded budget hotels. In April 2024, Travelodge OpCo Group acquired six hotels, totalling 773 rooms, from Louvre Hotels Group, doubling its presence in the region.
In February 2024, Travelodge PropCo Group* completed the acquisition of 66 Travelodge branded hotels on a freehold and long leasehold basis from LXi REIT plc, for a purchase price of £210 million.
Positive demand drivers ahead, Travelodge well positioned
While the macroeconomic backdrop in the UK remains uncertain, Travelodge expects to benefit from several positive demand drivers such as the continued staycation demand, changes in working patterns and events – supported by the improving UK consumer outlook.
With Travelodge’s strong brand proposition, resilient underlying customer demand across business and leisure travel, diversified network of well-invested hotels and efficient operating model, the business is well positioned. It continues to invest in the business to drive growth and quality and remains confident in the long-term prospects for budget hotels and excited about the future growth opportunities.
ENDS
* Travelodge PropCo Group is held separately, but alongside Travelodge OpCo Group, by a newly formed direct parent of Thame and London Limited (T&L Holdco Limited).
Enquiries:
FGS Global Tel: 0207 251 38 01 Jenny Davey/Anjali Unnikrishnan Email: Travelodge-LON@fgsglobal.com
About Travelodge
Founded in 1985, Travelodge is Britain’s very first budget hotel chain and today is one of the largest budget hotel chains in the UK, with a portfolio of over 600 hotels and over 47,000 bedrooms across the UK, Ireland and Spain.
In Spain, Travelodge has an established profitable presence and as of April 2024, its portfolio doubled to 12 hotels, having recently acquired a further six properties. Travelodge has ambitious growth plans within this market and has identified the top 20 key locations where it would like to open a hotel in Spain.
Welcoming over 22 million guests annually, the majority of Travelodge hotels are located in major cities, towns and holiday hotspots as well as by airports and key business hubs. With 90% of its hotels rated 4* or above on TripAdvisor, Travelodge is proud to offer guests across its diverse customer base a good value experience – whether they are travelling for business or leisure. In 2023, approximately 50% of rooms were sold for less than £60.
With a focus on helping people to go and do their thing by Being the Brilliant Base for all of life’s occasions, whether that’s celebrating a birthday, visiting the kids at university, going to a concert or sports event, taking a business trip or working away from home, or going to a concert or sports event, Travelodge concentrates on the essentials; a stay that is well-priced and well-located, that you can trust.
Travelodge continues to invest in its ongoing hotel refit programme which is expected to see 50% of the Travelodge room estate upgraded to its new design by the end of 2024. The brand is also continually evolving its quality offering to deliver a better experience for its diverse mix of business and leisure guests such as its new look Bar Cafe design, 85 Bar Café, which has been rolled out to selected UK hotels as part of the refit programme.
Travelodge is focused on its impact on the environment and its social responsibilities, with sustainability integral to its business strategy. Its Better Future Sustainability Plan aims to help build a more sustainable future for its customers, colleagues and the planet, and this is underpinned by three core pillars: Inclusive – ensuring we are accessible, inclusive and well-priced to our customers and colleagues; Caring – creating a caring and healthy environment for our colleagues and customers and ensuring their wellbeing; and Conscious – Travelodge is actively conscious of its impact on the planet, taking into account the waste it produces, the energy and resources it consumes and carbon emissions.
For further information visit travelodge.co.uk or the Travelodge Hotels Limited LinkedIn page.