June 2022 - Travelodge Property Development

The events industry is bouncing back and the proof is in the bookings!

The events sector is worth £42.3 billion to the UK economy in terms of direct spend by event delegates, attendees and organisers and after two years of no events the industry is bouncing back and the proof is in our bookings data.

Britons are eager to resume the normal lives they had pre-pandemic and we have been experiencing a surge in bookings for events during the last few months. Our London hotels were full over the Jubilee weeks with guests from all corners of the UK coming to the Capital to celebrate the Queen’s Jubilee. Last week there were no rooms at any of our hotels near Ascot. Our hotels are already getting booked up for Glastonbury, the Edinburgh Tattoo, BST Hyde Park as well as various gigs in Wembley.

60 Travelodge hotels undergoing Budget-Luxe transformation this year

We recently announced that we are evolving our core brand product to a new budget-luxe premium look and feel design. This is the brand’s most radical transformation to date and includes a new timeless, classic style reception, a next generation, multi-dimensional room and a contemporary restaurant & bar, called The Bar Café.

This year, 60 Travelodge hotels across the UK are being upgraded to the budget-luxe format. This multi-million investment has started and we are delighted to announce that 15 Travelodge hotels have had their budget-luxe make-over – this includes:

Five Travelodge hotels in London at: Bank, Southwark, Vauxhall, Wembley and Tower Bridge
Birmingham Moor Street Travelodge
Eastleigh Central Travelodge
Southampton Central Travelodge
Thame Travelodge
Manchester Salford Quays
Chertsey Travelodge
Cambridge Newmarket Road Travelodge

A further nine Travelodge hotels are currently undergoing their budget-luxe make-over. Click here to view the Travelodge budget-luxe design.

Travelodge reveals its current hotel development schedule – which represents an investment of £330 million by third party investors

2022 marks an important milestone in the evolution of Travelodge, as we launch our new premium look and feel budget-luxe Travelodge design hotels and expand our estate with new hotels and in-house restaurants. We are seeking to continue this expansion with plans for more than 75 new Travelodge hotels throughout the UK over the next five years, which will create around 2,000 new jobs.

As we look to the future, the long-term prospects for low-cost hotels remain strong. Britain has become a nation of value conscious travellers, with more of us choosing to stay in budget hotels than any other hotel type, supporting our plans to expand our hotel network. It is also an interesting time for the property sector; as the Covid pandemic has accelerated major change and opened opportunities for us to take Travelodge to new locations. We are very excited by the next phase of our expansion plan, which will see us deliver more choices in more places than ever before.

Our current development schedule includes

Six UK Travelodge hotels expected to open in 2022 – including the group’s first new-build premium look & feel budget-luxe design hotels in: Hexham, London Docklands & Wimbledon, in addition our franchise partner has opened a flagship hotel in Dublin

We have started our 2023 new hotel openings programme with construction started on four new UK hotels

Contracts exchanged for six further future UK Travelodge hotels over the last 12 months

Collectively, this proposed UK expansion would represent an investment of approximately £330 million by third party investors and would create around 400 new jobs

2022 Travelodge hotel openings

We are making great progress with our 2022 new hotel openings programme so far we have opened our first hotel in Braintree, London Lewisham and our Irish Franchise, TIFCO have opened a 397-room hotel in Dublin city centre financial district.

This summer we will open our first budget-luxe new build hotels in London Docklands and Hexham. During the autumn months we will also open a budget-luxe hotel in Wimbledon and our first hotel in London Peckham.

Interestingly, three of the Travelodge hotels opening this year, Braintree, London Docklands and Wimbledon, are in partnership with Local Authorities, with Docklands and Wimbledon being delivered under lease-wrapper structures. These pioneering development deals help to unlock major redevelopment, create jobs, boost the local economy and provide a long term income stream for Councils.

These seven hotel openings will collectively boost Travelodge’s network to 599 hotels across the UK, Ireland and Spain.

The four new hotel openings in London will also increase Travelodge’s presence to 80 across the Capital, covering 31 out of the 33 boroughs – making Travelodge one of the largest hotel brands in London.

London Wimbledon Travelodge – opening 2022

2023 Travelodge hotel opening programme underway

Our 2023 new hotel programme is also underway with construction started on four hotels. Three of these properties feature the new upgraded Bar Café concept and SuperRooms. Two of these hotels are located in London, at Beckenham and Bermondsey, and the other two properties are in Colchester and Ipswich.

New Travelodge hotel contract exchanges update

We have also recently exchanged contracts to develop a further six hotels with third-party investors. Locations include:

Harwich
London Loughton/Debden
Norwich
Rotherham
Salisbury
Waltham Cross

Lewisham Travelodge is the first of the group’s quadruple London hotel openings for 2022

We recently officially opened our 595^th hotel which is also our 78^thLondon Travelodge – in Lewisham High Street. This opening is the first of four hotels we plan to open in London this year. The other three hotels include the company’s first new-build premium look and feel budget-luxe hotels* in Docklands and Wimbledon and also our first hotel in Peckham.

This opening cements our position as one of the largest hotel chains in the capital. We now operate in 31 London Boroughs.

London Lewisham Travelodge, an 127-room hotel features the new upgraded on-site restaurant called the Bar Café and offers our premium economy SuperRooms as well as the standard Travelodge rooms.

This opening has created 40 new jobs within the community and offers rooms from £32. The hotel was officially opened by our Chief Revenue Officer Tom Edwards and landlord Salik Osman of Skill Crown.

Official opening of Travelodge Lewisham. Picture by Emma Sheppard

Travelodge announces 2021 financial results

We recently announced our 2021 financial results, which certainly proved to be a year of two halves. While the country suffered as a whole from the impact of the pandemic the first half of the year, we recovered strongly in H2, with our total underlying revenue in Q4 up 1.8% to £185.1m – trending ahead of pre-Covid levels. RevPAR was up 5.9% to £43.24, making our RevPAR performance 10.3pts ahead of the competitive segment vs 2019. This amazing outcome is down to the hard work and resilience of the tremendous team behind the Travelodge brand.

Detailed below are the key financial highlights.

Travelodge recovers strongly in 2021

Headlines (quarter ended 31 December 2021, comparison vs 2019)

Total underlying revenue up 1.8% to £185.1m – trending ahead of pre-Covid levels (2019: £181.8m, 2020: £53.5m)
RevPAR⁽⁾ up 5.9% to £43.24 (2019: £40.82, 2020: £12.78)
RevPAR performance 10.3pts ahead of the competitive segment⁽⁾ vs 2019
Occupancy⁽¹⁾ down 4.5pts to 76.3% (2019: 80.8%, 2020: 38.1%)
Average room rate⁽¹⁾ up 12.3% at £56.71 (2019: £50.52, 2020: £33.51)
EBITDA (adjusted)⁽⁾profit of £37.4m (2019: profit of £26.9m, 2020: loss of £25.8m)

Headlines (year ended 31 December 2021, comparison vs 2019)

Total underlying revenue down 23.1% to £559.8m (2019: £727.9m, 2020: £284.4m)
RevPAR⁽¹⁾ down 21.5% to £33.05 (2019: £42.09, 2020: £16.61)
RevPAR performance 10.8pts ahead of the competitive segment⁽²⁾ vs 2019
Occupancy⁽¹⁾ down 18.0pts to 62.6% (2019: 80.6%, 2020: 40.8%)
Average room rate⁽¹⁾ up 1.1% at £52.77 (2019: £52.20, 2020: £40.70)
EBITDA (adjusted)⁽³⁾profit of £81.1m (2019: profit of £129.1m, 2020: loss of £74.0m)
Cash of £142.8m at 31 December 2021
17 new hotels opened in the year
Total network now 592 hotels and 44,984 rooms as at 31 December 2021

2022 Highlights to date

Improvement in current trading following the lifting of the work from home guidance on 26 January, with strong leisure trading expected to continue, driven by staycation demand
The MSE segment continues to recover ahead of the UK market, and is now ahead of 2019 levels
Investment to evolve core brand – new premium look and feel budget-luxe design introduced with next generation Travelodge rooms. This year, 60 Travelodge hotels are being upgraded to the new budget-luxe design.

Martin Robinson, Travelodge Chairman commented:

“Travelodge reinforced its position as a resilient business with a powerful brand throughout a challenging 2021. I would like to thank all of our colleagues; it was the whole team’s hard work, dedication and flexibility that got us through the year. The business continued to out-perform the market for the seventh year in a row and enjoyed a record-breaking summer and in line with our growth plans, we opened a further 17 new hotels.”

“Trading so far in 2022 has been extremely encouraging, despite a slow start amidst the Omicron restrictions in January, and we are excited to launch our new budget-luxe hotel design, which offers a more premium look and feel whilst maintaining our great value price proposition. This is our most radical brand transformation to date and has been created in response to Britain becoming a nation of budget travellers, with more of us choosing to stay in budget hotels.”

“The budget hotel segment, whilst not immune from the broader economic uncertainty, has proven resilient and continues to recover ahead of the rest of the UK hotel market; and we believe that the opportunities to grow our business have never been more exciting. With our large, diversified network of hotels, strong brand, value proposition, and focus on domestic budget travel, we are well positioned to benefit in the anticipated recovery.”

Performance Overview

2021 was significantly impacted by Covid-19 with restrictions in place for most of the first half of the year. We started the year with around 300 hotels open for essential business travel, with a gradual re-opening of the estate in line with demand over the following months, before restrictions on leisure travel were partially lifted on 17 May 2021. Since then and following the lifting of all Covid-19 restrictions on 19 July we saw increasing demand, with high leisure demand in the summer period and strong recovery in “blue collar” demand offsetting the slower recover in “white collar” demand, until Omicron started to impact performance at the end of December.

The UK budget hotel market remains resilient, with revenue as a percentage of 2019 levels ahead of the total UK hotel market, driven by these strong levels of domestic leisure demand and a strong recovery in ‘blue collar’ business demand.

Overall UK like-for-like RevPAR for the fourth quarter was up 5.9% on 2019 levels, approximately 10.3pts ahead of the Smith Travel Research (STR) MSE benchmark competitive segment.

UK like-for-like RevPAR for the year ended 31 December was down 21.5% on 2019 levels, impacted by the restrictions in the first half, with the second half up 9.3%. Travelodge continued to outperform during the whole year, with like-for-like RevPAR approximately 10.8pts ahead of the STR MSE benchmark competitive segment.

Total underlying revenues for the fourth quarter were up 1.8% on 2019 levels driven mainly by extended leisure demand, particularly over the October half-term, offsetting the slower recovery in “white collar” demand and the impact of Omicron and the introduction of work from home measures from mid-December. Total underlying revenues for the year ended 31 December were down 23.1% on 2019 levels.

Costs remained well controlled and whilst Travelodge is not immune to the supply chain pressures affecting the wider hospitality industry, these were well managed, supported by our in-sourced housekeeping model and strong supplier relationships. We also benefited from the temporary reductions in rent under the terms of the CVA and from the government support available (mainly in the first half).

EBITDA (adjusted) for the fourth quarter was a profit of £37.4m (2019: profit of £26.9m, 2020: loss of £25.8m) and EBITDA (adjusted) for the year ended 31 December was a profit of £81.1m (2019: profit of £129.1m, 2020: loss of £74.0m).

We ended the year with cash of £142.8m (2020: £136.2m).

Recent Trading

The first weeks of 2022 were impacted by the Omicron variant including the related work from home guidance, particularly during mid-week and in Central London, with revenues in January overall down around 10% on 2019 levels.

Following the lifting of the work from home guidance on 26 January, demand improved and by early February accommodation revenue was almost immediately ahead of 2019 levels, supported by strong leisure trading, particularly over the half-term weeks, and the continued recovery in “blue collar” demand. We also continued to benefit from the reduced 12.5% VAT rate, which is in place until 1 April 2022. Revenue for the period from 1 January to 23 March 2022 was up approximately 3% on 2019 levels, with trading approximately 14% ahead of 2019 levels in the weeks following the lifting of the work from home guidance.

The MSE segment continues to recover ahead of the UK market, trading ahead of 2019 levels in recent weeks, with recovery vs 2019 levels around 20% points higher than the total hotel market, driven mainly by domestic leisure demand. There are also early indications that rate increases are being realised, in response to the current inflationary environment, although it’s still early days.

We have continued to outperform the STR MSE benchmark segment with UK like-for-like RevPAR approximately 7pts⁽⁾ ahead of the competitive segment in the first 11 weeks of 2022, with London and the Regions both outperforming.

The cash position remains strong.

Travelodge is evolving and launching a new budget-luxe hotel design

We took the opportunity in 2021 to conduct a strategic review of the business and as a result of this work we are evolving our core brand product to a new budget-luxe premium look and feel design – whilst maintaining our great value price proposition.

This new design has been created on the success of our budget chic hotel format, TravelodgePLUS and with feedback from the company’s largest consumer study – which surveyed around 5,000 UK business and leisure travellers to find the psychographics of the modern budget traveller. Key findings revealed that modern travellers crave style, choice and little homely touches to make it easier to work, rest and relax both inside and outside of the room.

In response to this consumer insight, we have remodelled our core product with a new budget-luxe design that includes all the key essentials you would expect from Travelodge but with the added benefit of thoughtful, stylish design and homely touches throughout its interiors.

The Travelodge budget-luxe design includes a number of sustainable initiatives. This includes the new carpet being made from recycled fishing nets which are part of a project supporting clean ocean initiatives, tackling over 640k tonnes of discarded fishing nets currently impacting marine life. The carpet backing is also made of old plastic bottles. Every ten of these bottles which are recycled rather than being sent to landfill saves enough energy to power a laptop for 25 hours. The other features include low energy lighting, motion sensing controls and aerated showers and taps

We intend to roll out the new budget-luxe design across our UK estate and have kick-started this programme with a multi-million pound investment to upgrade 60 hotels in 2022 in popular business and staycation destinations across the UK.

2022 Outlook

Forecasting remains a challenge and we expect the pace of the recovery will depend on several factors including the continued effectiveness of the vaccines, consumer and business behaviour and more broadly the general economic and political environment.

The MSE segment continues to recover fastest, benefiting from its domestic focus, business/leisure mix and value proposition, and this trend is expected to continue through 2022. We expect 2022 to benefit from sustained ‘blue-collar’ business demand, and strong leisure demand, offsetting a more gradual recovery in ‘white collar’ corporate demand. We do however face a number of cost headwinds, including the significant inflationary pressures facing the wider UK economy.

The Government has announced a 6.6% increase in the National Living Wage from 1 April 2022 and a 1.25% increase in employer National Insurance Contributions.

Operating costs, including rent, will also be impacted by general inflationary increases, as well as energy prices (although the majority of our forecast 2022 energy volumes are hedged) and some specific supplier price increases.

The situation in Ukraine may increase the impact of these cost pressures in the short-term and will depend on the duration of the crisis. The overwhelming majority of Travelodge’s customers are domestic, so the business has little exposure in terms of demand.

We expect to open six new UK leased hotels and one Irish franchise in 2022, with two opened so far. This is lower than our long run averages, as new deals were impacted by the pandemic, and we expect to return to more normal levels thereafter.

Whilst the macro-economic environment remains uncertain, the budget hotel segment has proven resilience and continues to recover ahead of the rest of the UK hotel market. With our large diversified network of hotels, strong brand, direct distribution model, value proposition, customer mix and domestic travel focus, Travelodge is well positioned to benefit from any recovery as demand builds and we are confident in the long-term prospects for budget hotels.

Travelodge reveals Q1 trading performance

Travelodge has released its Q1 2022 Trading Update for the period ending 31^st March 2022, which showed continued outperformance versus the Midscale and Economy sectors, which themselves continued to outperform the rest of the UK hotel industry.

Travelodge’s total underlying revenue was 7% ahead of the equivalent period in 2019, with RevPAR 4.3% ahead of 2019 and RevPAR Growth 7.6ppts ahead of the Midscale & Economy segments of the UK Hotel Market versus 2019. This strong performance saw EBITDA (adjusted) grow to £4.9m, compared to £1.7m in 2019, whilst the company had cash at 31^st March of £154.2m.

Three new hotels opened in the quarter including one Irish franchise in Dublin.

Travelodge confirmed that the strong trading performance and outperformance versus 2019 and the MS&E segments continued into Q2, with UK accommodation sales materially ahead of 2019 in all weeks (to end Week 19). It intends to make £70-£80m of capital investment this year, with around 60 hotels to be fully refitted to its new premium look and feel design; 11 of which have already been completed.

*Further information can be found on our investors website. All financial information is subject to disclaimers therein.

_{1. RevPAR is computed as the product of the Average Daily Rate for a specified period multiplied by the Occupancy for that period. Like-for-like (“LFL”) RevPAR compares the RevPAR in Q1 2022 vs. Q1 2019 on the basis of RevPAR generated by hotels that were opened before 1 January 2019.
2. EBITDA (adjusted) = Earnings before interest, tax, depreciation, amortisation and before rent phasing adjustment, non-underlying items and reflective of the position in line with historic accounting principles (before IFRS16). This measure reflects the rent reductions following the CVA which completed on 19 June 2020, recognised in line with the cash benefit. Non-underlying items have been removed as they relate to non-recurring, one-off items.}

Brighton Travelodge is one of the company’s first hotels to be upgraded to the new budget-luxe premium look & feel design

Travelodge, the pioneers of the UK budget hotel sector are delighted to announce that Brighton Travelodge is one of the group’s first hotels to be upgraded to the brand’s new budget-luxe design.

In April this year, Travelodge, announced that it was evolving its core brand product to a new budget-luxe premium look and feel design. This is the company’s biggest brand transformation to date, and in 2022, Travelodge is investing in a multi-million pound programme to upgrade 60 UK hotels in popular business and staycation destinations to its budget-luxe design.

Brighton Travelodge, a 94-room hotel with a Bar Cafe, is one of the first out of the group’s selected 60 hotels to receive its budget-luxe make-over.

Travelodge budget-luxe has been created on the success of the group’s budget chic hotel format, TravelodgePLUS with feedback from the company’s largest consumer study – which surveyed around 5,000 UK business and leisure travellers to find the psychographics of the modern budget traveller. Key findings revealed that modern travellers crave style, choice and little homely touches to make it easier to work, rest and relax both inside and outside of the room.

In response to this consumer insight, the Travelodge interiors team have remodelled their core product with a new budget-luxe design that includes all the low cost efficiencies you would expect from Travelodge but with the added benefit of thoughtful, stylish design and homely touches throughout its interiors.

This is underpinned by the introduction of a new signature rich navy blue brand colour which pays homage to the first iconic Travelodge blue brand colour- chosen for its calming and uplifting qualities. In essence all the key essentials that matter to modern business and leisure travellers.

The new budget-luxe design includes a timeless classic, elegant style reception which is the hub of the hotel. A next generation room which has been smartly devised to create a multi-dimensional space by utilising the new luxurious signature Travelodge navy blue colour for the R&R (resting and relaxing) section of the room and a serene colour palette for the functional and energising side of the room to work and get ready. Plus a contemporary designed restaurant called the Bar Café – that features spaces for guests to work, relax and socialise.

The budget-luxe design also includes a number of sustainable initiatives. This includes the new carpet being made from recycled fishing nets which are part of a project supporting clean ocean initiatives, tackling over 640k tonnes of discarded fishing nets currently impacting marine life. The carpet backing is also made of old plastic bottles. Every ten of these bottles which are recycled rather than being sent to landfill saves enough energy to power a laptop for 25 hours. The other features include low energy lighting, motion sensing controls and aerated showers and taps.

Lucia Eden, Hotel Manager, Brighton Travelodge, said: “My team and I are delighted that our hotel is one of the first Travelodge’s to be upgraded to the new budget-luxe premium look and feel design. This is our most radical brand transformation to date and the budget-luxe design certainly has the wow factor for our customers.”

“The Travelodge budget-luxe design has been created in response to ever increasing expectations from customers. Britain is now a nation of budget travellers, with more of us choosing to stay in budget hotels than any other hotel type and thoughtful, stylish design and homely touches really matter in today’s world when staying away for business or leisure.”

Psychologist Corinne Sweet said: Recent psychological research shows people’s tastes are changing and incorporating homely touches into décor and design are becoming essential to create a calming environment for wellbeing. The new Travelodge budget-luxe design fits the bill as the premium look and feel is a good mixture of high functionality, comfort and calmness which helps guests feel psychologically refreshed.”

The new Travelodge budget-luxe design features

A new hub of the hotel – a redesigned elegant reception

The new reception area has been designed in a warm timeless classic style featuring a decorative panel design, soft low LED lighting, stylish leather bench seating and wooden style flooring. The new colour palette includes the new warm Travelodge signature navy blue shade complemented against a palette of fresh tranquil neutral shades – creating a big warm welcome from Travelodge.

The next generation multi-dimensional Travelodge room

The new chic Travelodge room offers everything a business or leisure guest needs for a comfortable, relaxing stay and most importantly a good night’s sleep. The room has been smartly decorated to create a multi-dimensional space by utilising the new luxurious signature Travelodge navy blue colour for the R&R (Resting and Relaxing) section of the room and a serene colour palette for the functional and energising side of the room where you need to work and get ready.

The bespoke luxurious king-size Travelodge Dreamer bed remains the king of the room and is dressed with crisp white bed linen which includes a cosy 10.5 tog duvet and comfy pillows. The bed sits within a light box bed frame that emanates a soft, warm glow to aid relaxation and features bedside reading lights and USB charging points. Located above the bed is a bespoke piece of artwork commissioned by Travelodge which has been inspired by classic lullabies, with clever use of playful and discoverable elements to help you drift off to sleep.

The en-suite bathroom also features a new brilliant white complementary design and décor with complimentary hand, hair and body wash.

Other key features of the new room include:

A spacious desk and a stylish desk chair
A cosy statement armchair where you can kick back and curl up to read your book or watch TV
Blackout curtains to create a dark space for a good night’s sleep
Complimentary tea & coffee making facilities
A TV with Freeview
LED lighting in the room and bathroom

A stylish on-site restaurant with a statement bar called the ‘Bar Café’

The stylish Bar Café features a well-designed space for guests to work, relax and socialise. The restaurant features a contemporary design, with key statement features and a warm relaxing ambiance. The restaurant offers distinctive zones designed to suit the needs of business and leisure travellers. These include counter seating with built-in USB and laptop power for those working outside the room, dining zones with intimate booths and dining benches for groups. Situated in the heart of the Bar Café is a stylish statement bar which offers a selection of wines, popular spirits and a range of ales.

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