TRAVELODGE ANNOUNCES £20 MILLION OF PRICE CUTS IN AGGRESSIVE NEW PRICING STRATEGY
27th Nov 2005
Travelodge, the UK leading budget hotel brand, today announced an aggressive new pricing strategy for 2006, backed up by the delivery of £20 million of price cuts.
The new pricing structure will heap further pressure on Travelodge's competitors across the hotel industry, not least Whitbread's Premier Travel Inn.
Travelodge is committed to lowering prices to drive growth in the sector. The new strategy will produce 500,000 £26 rooms, around 100,000 £10 rooms, and further price cuts on thousands of standard rates for 2006 alone. Each of the company's hotels have been reviewed in order to undercut prices of the key competition in every location. The strategy will also produce just three new, simple price bands - Supersaver, Saver and Flexible.
Hotel expansion plans have also been increased to 2,750 rooms in 2006 and 3,000 in 2007, which will bring the total number of Travelodge rooms to over 20,000.
As a result of a review of its low cost business strategy, Travelodge has stripped out an additional £3m of head office costs to maintain its industry lead on price and support the new strategy.
Travelodge's CEO, Grant Hearn said, "Budget hotels are about offering a quality night's sleep at a low price. Our competitors have lost sight of this - we will not. With our rivals constantly raising prices, we are now the only true budget hotel offer in the UK. We can sell rooms at £26 but our competitors cannot.
"This new strategy means customers get the same great product but at even lower prices. Affordability and accessibility are what we are all about as we aim to make a hotel stay affordable for everyone."
Low Cost Unit
In addition, Travelodge has set up a new Low Cost unit and undertaken a full costs review generating £3 million of savings to keep the customer at the core of its strategy. This programme includes: head office being moved from two separate offices to a new office in Thame; completion of an IT systems rollout to all UK hotels, streamlining reservations systems and a review of its reservation call centre.
Following the success of the companys new hotel openings, Travelodge has also accelerated its development programme. This stepping up of the programme is reflected by plans to open eight hotels (792 rooms) in just one day on 2 December 2005 - a UK first for the industry. This December programme alone will create 275 jobs and feature openings from St Austell to Dundee. During 2005, Travelodge has reduced the cost of developing a hotel by 20%* and average construction time from
30 to 26 weeks. Smaller hotels can now be built in less than 20 weeks from start to finish.
Travelodges website upgrade (www.travelodge.co.uk) and investment in new IT systems this year have enabled the business to alter the balance of web and phone reservations radically. Online bookings have increased from 17% in 2003 to over 65% in 2005, meaning a much leaner reservations operation.
Grant Hearn added, "This strategy is another major step in cementing our position as the customers first choice for hotels. It is our intention that through our efficiencies we will sustain a long term programme of relentless price reductions to open the hotel market up to everyone."
Notes to editors
Greg Dawson 0121 521 6644
Rollo Head / James Leviton / Charlotte Mulford 020 7251 3801
Hotels opening on 2 December: London City Airport, Manchester Airport, Bury, Aberdeen, St Austell, Norwich, Pembroke Dock and Nottingham.
As the first budget hotel brand to launch in the UK in 1985, Travelodge currently has over 270 sites across the UK in city centres, near attractions and airports.
The latest BDRC British Hotel Guest Survey (February 2005) named Travelodge as the joint number one hotel brand in the UK (with Hilton) and the number one budget brand.
*This figure reflects a 10% rise in inflation during 2005.