Travelodge Group

Challenging market conditions but good strategic progress in Q1; strong fundamentals and well-positioned for medium-term growth

Travelodge Group trading update for the quarter ended 31 March 2025

  • Revenue of £198.4 million (2024: £205.5 million) for Q1, supported by a diverse range of business and leisure customers and occupancy levels ahead of the market, but impacted by softer UK market rates, particularly in Greater London
  • Group EBITDA loss of £8.4 million (2024: profit of £4.9 million) impacted by significant industry wide inflationary cost pressures and weaker UK market conditions, partially offset by new hotels and strong cost control and efficiency measures 
  • Spanish business continues to perform strongly, delivering good revenue and profit growth across like-for-like and new hotels
  • Positive Food & Beverage performance with growth of c.3% compared to Q1 2024 – driven by 85 Bar Café upgrades and menu enhancements 
  • Continued investments in growth and quality including hotel refit programme – with c.60% of room estate upgraded, delivering positive commercial and customer benefits
  • Successfully executing development plans in the UK, with 11 hotels open to date and a further 4 hotels exchanged or completed across a range of freehold and leasehold models
  • Encouraging progress on Spanish development plans with an increasing number of opportunities in the near-term and a growing pipeline, building on the recent successful acquisitions
  • Industry-leading cost model and continued focus on efficiencies helping to navigate significant industry wide inflationary cost pressures, supported by in-sourcing, innovation and technology upgrades 
  • Strong liquidity position with £202.9 million in cash at quarter-end 
  • Encouraging future demand indicators – Q2 trading impacted by softer rates, reduced corporate demand and events schedule, particularly in Greater London, but H2 booked revenue ahead of 2024, supported by robust events programme and early signs of improving construction demand

Jo Boydell, Travelodge Chief Executive Officer, said: “Travelodge has made good strategic progress in the first quarter, with our investments in growth and quality driving good occupancy levels ahead of the market. However, our performance in the traditionally most quiet quarter reflects challenging external market conditions, particularly in Greater London, where softer rates and reduced business travel impacted trading.

“We remain focused on driving growth, quality and efficiencies through strategic investments, including our hotel refit programme which has now seen c.60% of our room estate upgraded, continuing to deliver both commercial and customer benefits. We are also making excellent progress with our development plans, with 11 hotels open to date and a further four hotels exchanged or completed across a range of freehold and leasehold models. This is alongside a growing pipeline in Spain, where our expanded portfolio is performing strongly.

“Looking ahead, despite macroeconomic uncertainty, we are encouraged by H2 forward bookings, a robust summer events programme featuring major stadium concerts like Oasis, Beyoncé and Bruce Springsteen, and early positive signs of returning business travel demand, particularly from the construction sector. With a clear strategy supported by a strong liquidity position, efficient operating model and well-invested hotel network, we are well-positioned for the future and excited about the growth opportunities ahead of us.”

22 May 2025 – Travelodge Group, the UK’s first budget hotel brand which operates more than 600 hotels, today announces financial results for its first quarter ended 31 March 2025. Travelodge reports Q1 revenue of £198.4 million (2024: £205.5 million), reflecting softer UK market trading conditions, particularly in Greater London, where weaker rates and reduced demand impacted RevPAR.

The business continues to face significant industry-wide cost inflation, with Q1 profits impacted by c. £8 million in inflationary cost increases, including the annualisation of the c. 10% National Living Wage increase from April 2024 and inflation linked rent reviews. From April 2025, the National Living Wage increased by a further 6.7%, which combined with the impact of the Q1 NLW increase will result in a cost increase of c. £12 million for the year. Additionally, the rise in employer National Insurance contributions and reduction in the threshold for National Insurance from April 2025 are expected to increase costs by c. £9 million in 2025. There will also be additional cost increases in the remainder of the year due to inflation linked rent reviews.

Travelodge remains focused on strong cost control and efficiencies and has delivered further cost savings to partially offset these inflationary cost pressures. EBITDA decreased year-on-year from a profit of £4.9 million to a loss of £8.4 million, reflecting weaker UK trading and significant industry-wide cost inflation, partially offset by the cost savings being delivered.

Travelodge continues to benefit from its diverse mix of business and leisure customers, maintaining occupancy levels significantly ahead of the market, though offset by softer rates. Leisure bookings in the quarter were boosted by events such as Cheltenham Festival, The Six Nations Rugby and Crufts, while business travel demand benefitted from face-to-face networking at events like IFE (the International Food & Drink Event), the UK’s largest food and drink industry event.

In Q2 to-date, market RevPAR has continued below 2024 levels, with the weakest performance continuing to be in London due to softer rates, fewer events and reduced corporate demand. Travelodge has performed slightly below the MSE competitive segment in Q2, adjusting for rooms temporarily unavailable due to refurbishment at a London hotel. Encouragingly, booked revenue for H2 is ahead of 2024, supported by a robust events programme, improving construction demand and increases in consumer spending. With a strong brand, efficient operating model and well-invested network, Travelodge is well-positioned for future growth.

Investments to drive growth, quality and efficiencies

Travelodge continues to deliver good strategic progress, investing in the business to drive growth, quality and efficiencies. The hotel refit programme, part of Travelodge’s most significant brand transformation to date, is now well progressed, with c.60% of the room estate refitted to date. The next generation rooms, re-designed reception and new look bar café design, 85 Bar Café, are delivering positive commercial and customer benefits. Over 96% of Travelodge hotels are rated 4-dot or above on Tripadvisor, with 369 Travellers’ Choice Awards this year – 45 more than last year.

Growth and optimisation of portfolio in the UK and Spain 

Travelodge is successfully executing development plans in the UK, with 11 hotels open to date and a further 4 hotels exchanged or completed across a range of freehold and leasehold models. Travelodge expects to open over 15 new hotels in 2025. This includes completion of the acquisition of a portfolio of nine hotels, a mix of freeholds and long leaseholds, with eight now trading as Travelodge and due to be refitted later this year. Despite ongoing challenges in the real estate market affecting the pace of leasehold development, Travelodge also expects to open four new build UK leasehold hotels, with London Chiswick already open, as well as two leasehold rebrands which are already trading. The supply backdrop in the UK remains attractive, with a reducing number of independent operators creating further growth opportunities for the business.

Travelodge’s Spanish business – which doubled in size in 2024 – continues to perform strongly, with total revenue up c.£2 million and EBITDA at £0.9 million (Q1 2024: £0.4 million). This includes the benefit of the six hotels acquired in April 2024, which are performing well, as well as good like-for-like performance. The Spanish pipeline continues to grow, with increasing opportunities for leasehold and freehold acquisitions as well as further development projects, building on Travelodge’s strong profitable presence in the market.

Outlook: encouraging signs ahead 

While the macroeconomic and political environment remains uncertain, Travelodge sees both opportunities and challenges in the months ahead. The business is encouraged by positive signs for the second half of 2025, including booked revenue being ahead of 2024, a robust events programme and improving construction demand. With a strong brand, efficient operating model and well-invested hotel network, the business is well-positioned for future growth and remains confident in the medium-term prospects for the budget hotel sector.

ENDS

Enquiries:

FGS Global   

Jenny Davey    

Anjali Unnikrishnan

Tel: 0207 251 38 01

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 has ambitious growth plans within this market and has identified the top key locations where it would like to open additional hotels in 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 over 96% 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. 

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 and has already upgraded c.60% of the Travelodge room estate to its new design. 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 focusing on its environmental and social impact, with sustainability integral to its business strategy. Its Better Future sustainability plan aims to build a more sustainable future for its customers, colleagues and the planet, 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 the Travelodge website or Travelodge LinkedIn page.