Development & Funding

Travelodge is an operational business, whose expertise is in providing a great night’s sleep, at quality, comfortable and affordable hotels, in great locations. We operate both a freehold and leasehold structure and are interested in exploring opportunities under both models. 

Freehold

Following Travelodge’s acquisition, in February 2024, of the freehold and long-leasehold interests in 66 Travelodge-branded hotels, from Travelodge’s largest landlord, London Metric (formerly LXi REIT plc), for a purchase price of £210 million, Travelodge established an OpCo/PropCo structure. 

Since then, Travelodge has acquired the freehold and long-leasehold interests in a number of other properties that were not Travelodge-branded hotels. 

In April 2024, Travelodge acquired six Spanish hotels, with 773 rooms, from Louvre Hotels Group. These properties were branded Hotel Campanile and five were acquired on a freehold basis, with one long-leasehold. The hotels are located in Alicante, Barcelona, Madrid, Malaga and Murcia and were rebranded immediately to Travelodge and subsequently refitted and upgraded in line with Travelodge’s brand standards. This doubled our presence in Spain and gives us the ideal base to build our brand even further.

In November 2024, Travelodge acquired the freehold interest in an office building (Genesis House, Godliman Street) in St Pauls, London, on an unconditional basis. The deal was self-funded by the Travelodge OpCo Group. Subject to planning permission, the 24,000 sq. ft. building will be converted to a Travelodge hotel, which will comprise 95 rooms and a restaurant, 85 Bar Cafe. 

In April 2025, Travelodge acquired 9 English hotels, with 951 rooms, from Louvre Hotel Group. These were branded Hotel Campanile and five were acquired on a freehold basis and four long-leasehold. The hotels are located in Birmingham, Bradford, Dartford, Leicester, Liverpool, Manchester, Milton Keynes, Northampton and Swindon. 

Travelodge’s strategy is to enhance value by diversifying its freehold/leasehold split and we will therefore seek to acquire more going concerns throughout Great Britain and Spain and building conversion opportunities in London and the major UK and Spanish markets.

Leasehold

Travelodge is an operational hotel business and, to focus on this, the majority of our 610+ hotels operate under a leasehold business model. Travelodge Hotels Limited (the operational company which holds all of our UK leases) enters into institutionally-acceptable, FRI, 25-year lease terms, with 5-yearly rent reviews in line with the CPI index, collared and capped at 0% & 4%. This allows maximum flexibility, enabling Travelodge to form part of mixed-use developments, open in the best locations and to add value to the overall investment package.

We enter into Agreements for Lease and Leases with developers, conditional on receipt of planning permission and have standard contracts drawn on fair, institutionally-acceptable terms.

Our developers build the new Travelodge hotels to a full turnkey specification, in accordance with our Tenant’s Requirement Document appended to the Agreement for Lease. The new lease is then entered into upon practical completion, with the new hotel usually then opening for trade within 7 days of PC.

The Travelodge standard Lease of Whole (to be used where Travelodge occupies a standalone development) and the Travelodge standard Lease of Part (where we share a building with other occupiers) have deliberately been drafted to represent a fair balance between the requirements of both the Landlord and Travelodge and to be “institutionally acceptable.” With long lease terms, no breaks and inflation-linked rent reviews, these provide good, long-term income investments and are therefore attractive to many investors. Further details of Travelodge lease investment and funding opportunities are outlined below.

Travelodge developments are carried out by a wide range of development companies, from major prop co’s to one-man-band developers. Recent projects have been completed by Aberdeen Standard, Associated British Foods Pension Fund, Aviva, Canal & River Trust Investments, Intu, Land Securities, LaSalle Investment Management, Legal & General, Lidl, Milton Keynes Parks Trust, Nuveen, Orchard Street IM, Peel, Principality Building Society, Reef Estates, Savills Investment Management, SEGRO, Stanhope and The Mall.

We have also opened a significant number of new hotels in partnership with Local Authorities, as part of Council-led developments, including Aylesbury Vale District Council, Barking & Dagenham Council, Breckland District Council, Cherwell District Council, City of Edinburgh Borough Council, City of Lincoln Council, Denbighshire County Council and Reigate & Banstead Borough Council.

Although most of Travelodge’s new hotel developments are developer-led, we do undertake some schemes ourselves, forward funded by funding partners. Our most recent transaction of this type was the April 2025 opening of the 113-room, London Chiswick Travelodge, which we developed on behalf of RTP Global Real Estate Investments, which forward funded the project. Following practical completion on 31st March 2025, the completed hotel was let to Travelodge Hotels Limited on a new 35-year lease, with 5-yearly, index-linked rent reviews. The purchase price reflected a funding yield of 4.75%. 

The links below will provide you with more details regarding the different kinds of deals that we agree and our Development Managers will be able to supply any additional information that you need regarding our development model or standard legal agreements.

Travelodges enters into institutionally-acceptable leases, for lease terms of 25+ years, with no breaks, structured with an initial annual rent that is reviewed upwards-only every 5 years, in line with inflation (CPI, collared and capped at 0% & 4%). This provides a longer lease length than is available from most other sectors of the UK property market, combined with a greater level of security than that offered by a management contract or turnover lease structure, which is utilised by many other hotel operators.

This lease structure and Travelodge Hotels Limited’s good covenant provides an attractive investment product, which continues to receive high levels of demand from a range of investors, including UK pension funds, various international investors, syndicated investors, family trusts and high net worth individuals.

Since 2010, over £750m has been invested directly in the Travelodge covenant by the UK’s major pension funds, including the Associated British Food Pension Fund, Aviva, AXA, Blackrock, BP Pension Fund, CBREGi, Charities Property Fund, Chubb Pension Fund, Derbyshire CC Pension Fund, Diageo, Henderson Global Investors, Lancashire Council Pension Fund, Leicestershire CC Pension Fund, Legal & General, Orchard Street IM, PRUPIM, Scottish Widows, Smiths Industries Pension Fund, Staffordshire CC Pension Fund and Standard Life.

Many of Travelodge’s developers are traders rather than investors and so forward commitment or forward funded opportunities are regularly available.

Forward funded deals are advantageous to investors, as they offer significant SDLT savings and can enable investors to benefit from Capital Allowances, both of which can significantly improve the running investment yield generated by the end investment.

Furthermore, the specification of our new hotels is better than our older hotels, because of Building Regulation and other Statutory requirements, and as our new hotels are built in accordance with our latest brand standards, more detail of which can be found in our design section, which include comfort cooling, new LED lighting, acoustic door sets and our latest decor and room types, including SuperRooms. All of our new hotels are built in accordance with EPC A standards and to Very Good BREEAM standards as a minimum, with many of our new openings achieving BREEAM Excellent certification.

For all these reasons, new Travelodge developments represent optimal investment opportunities.

As we open a wide range of different kinds of hotel developments (standalone, mixed-use, large and small hotels, in many different parts of the country), there is a large variety of different investment opportunities available, with lot sizes generally ranging from around £5m to £15m, though, occasionally, over £30m. London and Major Market hotels tend to be the most popular investments and therefore have the lowest investment yields. However, that obviously provides some excellent buying opportunities in some of the smaller Provincial markets, with more advantageous yields for locations from which Travelodge often trades extremely profitably, given the lower rental levels and lack of competition in these areas.

Some investors prefer standalone Travelodge developments, whilst others would rather invest in well-let mixed-use schemes.

Whatever your investment appetite, there is likely to be a Travelodge investment opportunity that will meet your criteria.

To discuss any funding opportunities, please contact our UK Development Director, Tony O’Brien, on 07785 115 628.

For many years, Travelodge has been tracking and recording all investment purchases of branded budget hotels and, where appropriate, are willing to share this information. You may request a copy from us by contacting us.

All of our leases are taken in the name of Travelodge Hotels Limited, which is Travelodge’s operational business. A Group Overview and copies of our Noteholder Presentations, Financial Reports and Investor Press Releases can be accessed via the below link.

Investor Information