September 2022 - Travelodge Property Development

Travelodge 2022 H1 Financial Statement

Record financial results and continued outperformance

Headlines (period ended 30 June 2022, comparison vs 2019)

Total underlying revenue up 16.0% to £391.2m (2019: £337.3m, 2021: £145.2m)
Occupancy¹ down 0.5pts to 79.2% (2019: 78.7%, 2021: 45.5%)
Average room rate¹ up 12.6% at £57.47 (2019: £51.05, 2021: £38.89)
RevPAR[1] up 13.3% to £45.51 (2019: £40.16, 2020: £17.69)
RevPAR performance 9.0pts ahead of the competitive segment[2] vs 2019
EBITDA (adjusted)[3]profit of £70.6m (2019: profit £44.7m, 2021: loss £43.3m)
Cash of £174.3m at 30 June 2022
5 new hotels opened to date, including one Irish franchise
Total network now 597 hotels and 45,761 rooms as at 30 June 2022

Headlines (quarter ended 30 June 2022, comparison vs 2019)

Total underlying revenue up 22.8% to £235.7m (2019: £192.0m, 2021: £103.6m)
Occupancy¹ up 2.3pts to 83.4% (2019: 81.1%, 2021: 58.0%)
Average room rate¹ up 16.8% at £65.26 (2019: £55.86, 2021: £43.03)
RevPAR¹ up 20.2% to £54.44 (2019: £45.28, 2020: £24.98)
RevPAR performance 9.6pts ahead of the competitive segment² vs 2019)
EBITDA (adjusted)³profit of £65.7m (2019: profit £42.9m, 2021: profit £2.9m)

Travelodge has delivered record trading performance in the first half of the year with revenue and profits significantly ahead of 2019 levels. This performance has been driven by strong leisure and ‘blue collar’ business demand, more than offsetting a more gradual recovery in ‘white collar’ demand and the impact of Omicron in January. We also continued our unrivalled record of outperformance against the MS&E segment. We are facing pressure from inflation, but costs were well controlled and whilst we have also seen some impact of the supply chain challenges facing the hospitality industry, these continue to be well managed.

Trading in the first weeks of quarter three has remained strong, with continued good leisure and ‘blue collar’ demand across all areas of the country. The recovery in ‘white-collar’ business demand continues, including Central London mid-week, with an improving trend prior to the normal seasonal slowdown. We continue to outperform against the market segment. We now expect 2022 full year RevPAR to be ‘mid-teen’ percent ahead of 2019 levels reflecting current trading patterns and a continued recovery in ‘white-collar’ business demand. The impact of the current macroeconomic environment on demand does however remain uncertain, but we do expect continued inflationary pressures on costs.

While forecasting remains challenging with limited forward visibility, we remain well positioned, with our large network of hotels, value proposition and focus on domestic travel.

[1] Revenue per available room, Average room rate and Occupancy on a UK like-for-like basis for the management accounting period 31 Mar 2022 to 29 Jun 2022 and 4 Apr 2019 to 3 July 2019 for the quarter. Revenue per available room, Average room rate and Occupancy on a UK like-for-like basis for the management accounting period 30 Dec 2021 to 29 June 22 and 2 Jan 2019 to 3 Jul 2019 for the period.

[2] Our competitive segment is the Midscale and Economy Sector of the UK hotel market as reported by Smith Travel Research (STR), an independent hotel research provider, providing aggregate benchmarking information on the UK and other hotel market performance

[3] EBITDA (adjusted) = Earnings before interest, tax, depreciation and amortisation, and before rent adjustment and non-underlying items, and in line with historic accounting principles (before IFRS 16). This measure reflects the cash benefit of rent reductions following the CVA which completed on 17 June 2020. Non underlying items have been removed as they relate to non-recurring, one-off items.

Travelodge opens its first new-build, budget-luxe hotels in London Docklands and in the North of England – Hexham

The hotel chain also announces that it is actively looking for more hotel sites in London and in the North East of England.

This summer, Travelodge officially opened its first new-build, budget-luxe hotels at London Docklands and in the north of England, in the picturesque town, Hexham – which is one of the gateways to the heart of Hadrian’s Wall. With the opening of these two hotels, Travelodge now operates 597 hotels across the UK, Ireland and Spain.

Earlier this year, Travelodge announced it was evolving its core brand product to a new, budget-luxe, premium look and feel design – whilst maintaining its great value price proposition. This new design 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.

London Docklands Travelodge, is located by East India DLR station and is the group’s 78th hotel in the Capital, positioning Travelodge as one of London’s biggest hotel chains (With hotels in 31 out of the 33 London Boroughs).

The 350-room London Docklands Travelodge features scenic views of the O2, The Thames and Canary Wharf. It is also the most sustainable Travelodge hotel with a BREEAM Excellent rating, an Energy Performance Certificate rating of A and a number of sustainable features which includes solar panels on the roof, air source heat pumps and electric vehicle charging points. It is also the group’s 22nd Local Authorities lease-wrapper deal partnership, with the landlord being Barking & Dagenham Council.

London Docklands Travelodge hotel was officially opened by Travelodge Chief Executive, Jo Boydell and UKHospitality Chief Executive, Kate Nicholls. At the hotel opening ceremony, the group announced that London remains a key growth area and that they are actively looking for 127 hotel sites across the Capital to open a Travelodge hotel. This potential investment could represent an investment of nearly £3 billion for third party investors and create over 6,000 new jobs.

Hexham Travelodge is the group’s first new-build, budget-luxe hotel to open in the north of England, It is the second hotel the group has opened in the North East region within the last seven months. In December 2021, the hotel chain opened the first budget hotel at Europe’s biggest business park, Newcastle Cobalt Business Park.

At the Hexham Travelodge official opening ceremony, the hotel chain announced that the North East remains a key growth area and they are actively looking for a further 16 hotel sites across the region. This expansion programme could represent an investment of around £160 million for third party investors and create 400 new jobs.

The 16 North East target sites, where Travelodge is actively looking to open a hotel include nine growing towns which currently don’t have a Travelodge hotel. These locations include: Beverley, Bridlington, Headingley, Grimsby/Cleethorpes, Knaresborough/Wetherby, Northallerton, Ripon, South Shields and Thirsk.

The group is also looking to expand its portfolio in the following established North East markets which includes:

Finding a suitable site to open a second Travelodge hotel in Barnsley, Chesterfield, Durham and Middlesbrough
Finding a suitable site to add a third Travelodge hotel site in Wakefield
Finding a suitable site to add a fourth hotel in Sheffield
Finding a suitable site to add a fifth hotel in Leeds

Hexham Travelodge, a 69 room hotel is the town’s first branded hotel and the group’s 23^rd property in the North East. The hotel represents a multi-million investment for the landlord. It is located in the town centre, close to the railway station and has created 27 new jobs within the community.

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
Complimentary WIFI for 30 mins £3 for 24 hours

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.

The Travelodge budget luxe upgrade hotel refit programme hits the halfway mark

Travelodge’s multi-million, budget-luxe hotel upgrade programme has reached the halfway point and now there are over 30 Travelodge hotels across the UK featuring the new premium look and feel design. This multi-million pound capital investment is Travelodge’s most radical transformation to date.

By the end of this year, there will be 65 Travelodge hotels featuring the new budget luxe hotel design.

Customer feedback on the new Travelodge budget-luxe hotel design has been very positive which is also evident in trading performance and customer feedback scores.

The most recent Travelodge hotels to be upgraded to the new budget luxe design include: Manchester Salford Quays, Liverpool Central The Strand, Birmingham Moor Street and London Tower Bridge Travelodge.

Travelodge’s capital investment programme for 2022 is expected to be around £80 million, for the hotel upgrades, hotel maintenance, IT, health & safety, development and key operational projects, such as energy efficiency.

Construction underway on six new Travelodge hotels

London Wimbledon Travelodge – opening this Autumn

Travelodge is continuing to expand its hotel network, grow its business and make travel affordable for everyone.

The budget hotel chain currently has six hotels under construction. This includes four hotels in London at: London Wimbledon, London Peckham, London Beckenham and London Bermondsey. The other two developments are located in Colchester and Ipswich.

London Wimbledon Travelodge, a 177-room hotel, is expected to open this autumn. It is located just off the High Street and 100 metres from the station. It is the company’s third new-build, budget-luxe hotel and will feature the company’s premium economy Super Rooms and Travelodge’s on-site restaurant called The Bar Cafe.

New Travelodge hotel development contract exchanges

Travelodge has recently exchanged contracts to develop a further six hotels with third-party investors. Locations include:

Harwich
London Loughton/Debden
Norwich City Centre
Rotherham
Salisbury
Waltham Cross

Travelodge launches new sustainability plan – ‘Better Future’

www.travelodgesustainability.co.uk

Travelodge has recently officially launched its first sustainability plan which is titled ‘Better Future’.

The ambitious ‘Better Future’ plan defines the company’s KPI’s and performance targets with the aim for the group to create a route to become a net zero hotel operator and to be aligned to Science Based Targets (SBTI).

Travelodge appointed the UK’s leading sustainability agency Simply Sustainable to help define its comprehensive sustainability programme. The group also involved its customers, colleagues, investors, landlords, suppliers, local authorities and local communities to ensure every aspect of the plan is rooted in the most important sustainability priorities of its stakeholders.

The Travelodge ‘Better Future’ programme supports the company’s core objective to provide affordable travel for everyone and is integrated with the wider business strategy. It outlines a clear sustainable vision with KPI’s to create a better future for customers, colleagues and the planet, and is underpinned by three core pillars.

The three pillars of the plan include:

The vision to create a Better Future for Travelodge customers, colleagues and the planet is underpinned by three core pillars: Inclusive, Caring and Conscious.

Detailed below are Travelodge’s primary focuses under each pillar.

Inclusive: Ensuring Travelodge is accessible, inclusive and affordable to its colleagues and customers.

Diversity & inclusion: Everyone should feel welcome and part of the Travelodge team
Social mobility: Allow our colleagues to learn more, earn more and belong

Caring: Creating a safe and healthy environment for our colleagues and customers, and ensuring their wellbeing.

Wellbeing: Improve the physical, emotional, financial and work wellbeing of our colleagues
Charity: Support our charity partners which are currently: Pennies and the British Heart Foundation

Conscious: Being actively conscious of the waste we produce, the energy and resources we consume and our carbon emissions.

Net zero: Reduce its energy consumption through energy efficiency projects. Migrate its residual supply to green sources and / or find other ways to offset any remainder

New builds and refurbishment programme: Build our new hotels and refurbish our existing hotels with sustainability as a key consideration

To help create its Better Future plan, Travelodge appointed Simply Sustainable, an award-winning global management consulting specialist in ESG and sustainable business.

During the last 12 months, the group also consulted a wide range of stakeholders, which included landlords, investors, local authorities, developers, key suppliers and charity partners. Travelodge also surveyed over 40,000 of its business and leisure customers and their team of over 10,000 colleagues. This vital feedback helped the group to ensure that every aspect of their plan is rooted in the most important sustainability priorities of its stakeholders.

To support the implementation of the Travelodge Better Future plan, the group has put into place a governance model with a steering committee to ensure effective monitoring and implementation of the plan. In addition, the group will also provide an annual Sustainability Report.

Jo Boydell, Travelodge, Chief Executive said: “As one of the UK’s largest hotel brands, we have always been committed to doing business responsibly. However, we know that there is more we need to do and we believe that sustainability has a critically important role to play in shaping the future of Travelodge. Today, we are proud to launch our new sustainability plan to create a ‘Better Future’ for our customers, colleagues and the planet.

“We are proud of the work that has gone into creating our Better Future plan. The plan has been designed to mark a step-change in our sustainability agenda and is fully integrated with our wider business strategy and our purpose – to provide affordable travel for everyone. Our KPIs and performance targets have been identified for their capacity to stretch and challenge us. We have a long road ahead of us to complete our route to becoming a net-zero hotel operator and continue our journey to make sustainable, affordable travel for everyone a reality.”

Nicola Stops, Simply Sustainable, Chief Executive said: “We are delighted to help accelerate Travelodge’s journey to become a more sustainable business. The group has always been committed to doing business responsibly and has launched a number of sustainable initiatives over the years, but now the ‘Better Future’ plan officially formalises the company’s approach with clear targets, KPIs and updates. Furthermore, the group’s clear vision of being inclusive, caring and conscious gives its stakeholder’s confidence they’re dealing with a business that takes care of its people, the communities it operates in and the planet and is constantly striving to become more sustainable.”

Detailed below are some examples of sustainable initiatives that Travelodge has already implemented

Modern LED lighting with motion-sensing controls has been installed in hotel public areas, and programmes are in progress to roll-out LED lighting in rooms and smart heating and cooling systems.

The new Travelodge budget-luxe design, which was launched in April this year, includes a number of sustainable initiatives. The new carpet is made from recycled fishing nets, which are part of a project supporting clean ocean initiatives and the carpet backing is also made of old plastic bottles. Other features include low energy lighting, motion sensing controls, dual-flush toilets and aerated showers and taps.

The company’s latest hotel opening, London Docklands Travelodge, is designed to an ‘Excellent’ BREEAM rating and has an Energy Performance Certificate (“EPC”) rating of A. The hotel utilises Air Source Heat Pumps to heat water, has solar panels on the roof and 50% of all car parking spaces offer electric vehicle charging.

This year, Travelodge has partnered with the Purpose Coalition on a Levelling Up Impact Report. This study will set out the group’s contribution to the UK levelling up agenda. Purpose Coalition is made up of the UK’s most innovative purpose-led leaders and organisations. The Levelling Up Impact Report will highlight the work Travelodge is already undertaking to deliver a positive impact on communities across the country within the architecture of the Purpose Goals, known as the Levelling Up Goals in the UK.

Travelodge has also appointed Disability Positive to advise on policy and training programmes to support customers living with disability and long-term health conditions and their families.

Travelodge has expanded it’s Estates team

One of the key investments in the Property and Development team this year has been to expand the Travelodge Estates team.

Stuart Williams joined Travelodge in October 2021, as Head of Estates. Stuart previously held positions as the Property Director at Majestic Wines and Head of Property at Game. Stuart has brought a wealth of knowledge and expertise to Travelodge and has been busy this year building a new strong team.

The Travelodge Estates team is dedicated to supporting the hotels and the wider business with general estate matters and is also responsible for rent reviews, service charges, business rates, sublets, insurance, lease renewals and landlord approvals.

The team is field- based so that they can make regular hotel visits, allowing them to gain an in-depth understanding of the Travelodge hotel portfolio and support landlords.

If you would like to arrange a meeting with your Travelodge Estate team representative, please email at one of the following email addresses.

estates@travelodge.co.uk – for estate management and inspections@travelodge.co.uk – for hotel inspection requests

Meet the new Travelodge Estates team

Maqs joins Travelodge from Savills, where she worked within the property management team on a variety of portfolios which included supporting Travelodge for the last year.

Kirsty joins Travelodge from Domino’s Pizza Group where she was an Acquisition Manager, having held previous acquisition/estates roles with Anytime Fitness and Majestic Wine.

Mark joins Travelodge from GAME Retail where he has held various roles over a 20 year span. His recent role at Game Retail was Estates and Property Manager.

Emma has worked at Travelodge for the past five years and supports the Estate and Refit teams.

The Travelodge Estate team is looking forward to meeting with you and your respective agents in the near future.

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