Travelodge Group First half performance in line with expectations; strategic investments to drive growth and quality, well positioned for long-term success
Travelodge Group financial results for the six months ended 30 June 2024
- Revenue growth supported by resilient customer demand: total revenue up 1.7% to £486.7 million (2023: £478.7 million) driven by strong occupancy growth from our diverse range of both leisure and business customers and new hotels
- EBITDA impacted by planned investments: Group EBITDA of £82.2 million*, reflecting significant investments to drive growth and quality and overall inflationary pressures, as well as the positive impact of freehold property acquisitions
- Continued strategic investments delivering positive results: investment in accelerated refit programme and multi-channel advertising campaign driving commercial and customer benefits
- Strong performance in Spain: Spanish business performing strongly, delivering revenue and profit growth – total revenue up c.45%, benefitting from like-for-like growth of c. 12% and contribution from new hotels, including five freehold acquisitions earlier this year
- Continued strong cash flow generation: Period end Group cash balance of £263.5 million; completed successful OpCo bond refinancing in June 2024
- Good momentum into H2: Total revenues in July ahead of 2023 levels; forward booking patterns are positive with booked revenue to the end of the year ahead of 2023 bookings at the same point; strong long lead event demand
Jo Boydell, Travelodge Chief Executive, said: “Travelodge Group delivered a first-half performance in line with expectations, with our financial performance reflecting our continued investment in the business to drive growth and quality, including freehold acquisitions, as well as inflationary cost pressures and softer market demand, particularly in London.
“Revenue growth was supported by resilient customer demand from both leisure and business guests, with encouraging trends including continuing staycation demand, more people working in offices again and more face-to-face meetings. Events during the period were below 2023 levels, and included music concerts such as Take That, Pink and the first UK dates of Taylor Swift’s Eras Tour, as well as sporting events such as Cheltenham Festival, the Six Nations Rugby and the Grand National, and business trade fairs such as International Confex, a two-day gathering for event organisers, and ICE London, the gaming showcase event.
“We continued to invest in our accelerated refit programme, upgrading our estate to next generation rooms, with our ongoing multi-channel advertising campaign promoting the transformation. This is already showing positive customer and commercial benefits, and we will have upgraded 50% of our room estate by the end of 2024.
“We remain focused on expanding and optimising our portfolio of increasingly well-invested, well-located hotels. In the UK, we acquired 66 Travelodge-branded hotels on a freehold basis from LXi REIT plc and so far this year have opened five new hotels. Spain remains a key growth market for Travelodge, with the acquisition of five hotels from Louvre Group, agreement to acquire one further hotel and deals signed for three new builds in San Sebastian, Cadiz and Alicante.
“UK revenues in the third quarter to date are modestly below 2023 levels but we were encouraged by improving trends during July, with UK revenues ahead of 2023 in that month. Forward bookings are also positive, with booked revenue to the end of the year ahead of 2023 levels at this point, driven by strong event demand. Our strong financial position, combined with our affordable proposition and diversified, increasingly well invested hotel network, position us well for long-term growth.”
22 August 2024 – Travelodge Group, the UK’s first budget hotel brand which operates more than 600 hotels, today announces its half year results for the six months ended 30 June 2024. Travelodge delivered a 1.7% increase in revenue to £486.7 million (2023: £478.7 million), reflecting resilient customer demand from its diverse range of both leisure and business customers.
During the period, Travelodge continued investing to drive growth and quality. The accelerated refit programme and multi-channel advertising campaign have driven positive commercial and customer impacts. Upgrades to property management and IT systems are ongoing, along with continued investment in technology to optimise digital conversion. This includes the recent launch of a new mobile app with enhanced features, including Apple Pay, Google Pay, biometric login, and personalised experiences, achieving 4.8* reviews and driving strong revenue growth. Travelodge also remains focused on expanding and optimising its well-invested and well-located portfolio, through UK development and expansion in Spain.
Financial performance in the first half of the year reflects these investments, in conjunction with slightly softer market demand (impacted by fewer events, weather and strikes), particularly in London, and industry-wide cost pressures. Adjusting for the £12 million advertising spend and investment to drive growth and quality (including upgrading our property management system), underlying Group EBITDA was £94.4 million. For Travelodge OpCo, underlying EBITDA was £89.2 million (2023: £98.5 million).
Travelodge delivered good occupancy growth, reflecting resilient demand from its diverse range of both leisure and business customers seeking affordable, high-quality accommodation. Leisure guests used Travelodge as a base for many purposes, including stadium tours, such as Take That, Pink and the first UK dates of Taylor Swift’s Eras Tour, as well as sporting events including Cheltenham Festival, the Six Nations Rugby, the Grand National, Royal Ascot and the marathons in London and Edinburgh. Business guests included those travelling for meetings, working away from home and also those attending industry events such as International Confex, a two-day gathering for event organisers, and ICE London, the gaming showcase event.
UK revenues in the third quarter to date are modestly below 2023 levels, with regional performance steady, offset by weaker London performance, in line with the wider midscale economy (MSE) hospitality segment. However, trading through July showed improvement, with UK revenues surpassing 2023 levels in that month. Record-breaking days during events including the British Open Golf and Farnborough Airshow boosted revenues, although the weather impacted events such as Wimbledon. Forward bookings are positive, with booked revenue to the end of the year ahead of 2023 levels at the same point, driven by strong event demand.
Continued investment to drive growth and quality
Travelodge continues to invest in the business to drive growth and quality while ensuring a well-priced, well-located stay that customers can trust.
This includes the accelerated refit programme – Travelodge’s most significant brand transformation to date – which is delivering both commercial and customer benefits, with almost 95% of its hotels now rated four dots or above on TripAdvisor. By the end of 2024, approximately 50% of the estate will have been refitted, with modern rooms, upgraded bar cafés in the new 85 Bar Cafe design and new style receptions, delivering a more welcoming environment.
Travelodge also continued to invest in its ongoing multi-channel advertising campaign, which is expected to build demand over time and is already having a positive impact, including increased visits to the website, higher conversion rates and an increase in brand metrics.
Upgrades to the property management system and IT systems are also ongoing, alongside continued investment in technology to optimise digital conversion. This includes the recent launch of a new mobile app with enhanced features, including Apple Pay, Google Pay, biometric login, and personalised experiences, which is achieving 4.8* reviews and driving strong revenue growth.
Continued growth in the UK, including freehold acquisitions
As previously announced, in February 2024, Travelodge PropCo 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.
Travelodge OpCo has also opened five new UK hotels in the year to date, including London Bermondsey, Rotherham, Colchester, Bristol, and London Oval, with one more expected by the end of the year. The UK hotel market remains attractive with significant future development opportunities.
Strengthened presence in Spain
Spain remains a key growth market for Travelodge, with strong leisure and business demand and low penetration of budget-branded hotels.
Travelodge is expanding its strong, profitable presence in Spain, driven by acquisitions, together with good leisure and business demand. Earlier this year, Travelodge Opco agreed to acquire six hotels from Louvre Group, doubling its presence to 12 hotels, with five of the six now completed and trading under the Travelodge brand. Travelodge has also signed deals for three new-build hotels in San Sebastian, Cadiz and Alicante, with further opportunities in the growing pipeline well progressed.
Outlook
Looking ahead, customers continue to prioritise value for money, and improving consumer sentiment and business confidence in the UK is positive for Travelodge.
Following the successful refinancing and rating agency upgrades, we have a robust financial position and will continue to keep our liquidity position and capital structure under review to support the growth of the business.
Travelodge expects to benefit from continuing staycation demand, evolving work patterns favoring office time and face-to-face meetings and events. With its strong brand, direct distribution model, resilient customer demand, well-invested hotel network and efficient operations, the business is well positioned. Travelodge continues to invest to drive growth and quality, is confident in the long-term prospects for budget hotels and excited about future growth opportunities.
ENDS
*Travelodge Group includes the addition of Travelodge PropCo Group’s acquisition of 66 hotels from LXi REIT plc, which completed
in February 2024.
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.
Welcoming over 22 million guests annually across the UK, Ireland and Spain, 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.
Whether out celebrating a birthday, going to a concert or sporting event, visiting friends and family, taking a business trip, working away from home, or taking a short break, we help people to go and do their thing by Being the Brilliant Base.
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 focussing on its environmental and social impact, with sustainability integral to its business strategy. It’s Better Future sustainability plan aims to build a more sustainable future for its customers, colleagues and the planet, and it 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 conscious of its impact on the planet, taking into account the waste it produces, the energy and other resources it consumes and the carbon emissions it generates.
For further information visit travelodge.co.uk or the Travelodge Hotels Limited LinkedIn page.