Travelodge announce trading update for the quarter ended 31 March 2024.
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Travelodge has announced its financial results for the quarter ended 31 March 2024, delivering a 3.5% increase in revenue to £205.5 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[1] 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[2] 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.