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Press releases

Travelodge and The Gym Group get co-expansion plans into shape

12th Nov 2012

Travelodge and The Gym Group, the UK’s fastest growing low-cost fitness chain, have announced plans to find ten sites in London and the South East where they can co-locate, via a £70 million investment plan.

Both companies are currently seeking to meet ambitious targets in and around the capital, and after successfully co-locating at four locations in the UK, have decided to look for further sites together over the next five years.

As part of their expansion plans in London, Travelodge is seeking to secure deals for an additional fifty hotels (5,030 rooms) by 2020, whilst Gym Group has set itself the target of 20 new gyms in the capital by 2013 alone.

The four locations already co-located by both companies are:

Travelodge: 152 beds
Gym Group: 16,500 sq ft

Travelodge: 96 beds
Gym Group: 16,500 sq ft

Travelodge: 279 beds
Gym Group: 17,000 sq ft

Travelodge: 86 beds (opens Q1 2014)
Gym Group: 14,500 sq ft (Just opened)

The two companies are looking for either standalone conversion/development opportunities, or mixed-use schemes that can be occupied jointly, possibly in conjunction with other users.

The two companies follow a leasehold business model, taking institutionally acceptable, effective full repairing and insuring lease terms, with 5-yearly rent reviews. This structure is ideally suited to mixed-use developments and provides an attractive and fundable investment package. By jointly occupying mixed-use sites, both companies have been able to secure locations that would have been unaffordable on their own.

Travelodge requires approximately 300 sq ft Gross Internal Area (GIA) per bedroom, in town centre or edge of town locations. Gym Group requires a floor space of 12,000-20,000 sq ft of clear space over one or two floors, with good floor to ceiling height in highly prominent locations.

As well as having mutually beneficial requirements for space, the growth models of both companies are similar in that they are based on an undersupply within the hotel and fitness market of budget options.

Budget hotel rooms in the UK only comprise 16% of the market whilst just 4% of fitness clubs are operated by the budget sector, meaning there is considerable scope for expansion at the expense of the mid-market.

Paul Harvey, Managing Director, International & Development at Travelodge said:

“The four co-locations with The Gym Group have worked enormously well for both parties so it makes absolute sense for us to look for, and secure, sites together. This really helps us with our growth plans for London and the South East.

“Given the space requirements of both companies, as well as our compatible business models, it really is the perfect fit: The Gym Group on the ground or lower ground floor and Travelodge on the floors above.”

John Treharne, CEO of The Gym Group, said:

“The increasing popularity for budget alternatives across a number of sectors reflects the wider consumer market’s demand for value. Our expansion plans are ambitious; we will have 32 sites open by January, and look to continue the same level of growth through 2013.

“We welcome any opportunity to co-habit with likeminded companies. It allows both parties to challenge the existence of their mid-market competitors, and ultimately offers the consumers better value for money.”

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