February 2023 - Travelodge Property Development

Travelodge announces it is expanding its Spanish operation by acquiring the lease of the popular NH Villa de Coslada hotel in Madrid and it has appointed global hospitality advisors Aldaba Partners to help grow its Spanish hotel portfolio.

This expansion programme reflects the key findings from comprehensive research, including a study of the Spanish hotel market that Travelodge commissioned from Christie & Co. Research showed that Spain is one of the most visited countries in the world and one of the fastest growing hotel markets across the globe, but there is a significant gap for branded, low cost and good quality accommodation in the midscale and economy segment. This growing segment indexes favourably with modern travellers who are looking for affordable accommodation options.

This research indicates a significant opportunity for Travelodge to grow in Spain, as the group has nearly four decades of expertise in operating budget hotels, a strong brand, and a proven successful long term lease model in place. Therefore it can offer investors and landlords an alternative long term income stream in Spain. Whilst offering business and leisure travellers more choice and great value accommodation.

At present, the Spanish hotel market is dominated by independent hotel owners, franchise and management agreement operators and shorter leasehold operators. However, our research showed that investors are increasingly looking for stable long term income streams in support of Spain’s growing tourism industry. This fits well with Travelodge’s traditional long term fixed lease model, as used in the UK.

To help capitalise on this growth opportunity in Spain, Travelodge has appointed Aldaba Partners, who are renowned across the globe for their comprehensive investment advisory service. Aldaba Partners will help grow the Travelodge business in Spain by finding suitable hotel sites and third party investors. Key growth locations include: Barcelona, Madrid, Alicante, Bilbao, Granada, Malaga, Palma, Seville and Valencia.

To launch its Spanish expansion programme, Travelodge is delighted to have acquired the lease of the NH Villa De Coslada hotel in Madrid. The 78-room hotel features an on-site restaurant, bar and car-park and is Coslada’s main hotel, situated close to the Civitas Metropolitano Stadium, IFEMA Convention Center and the airport – making it an ideal base for business and leisure customers.

Travelodge has acquired a 20-year lease to operate the hotel from Grupo Veintidos. The hotel will be renamed Travelodge Madrid Coslada Aeropuerto and the group will invest approximately €1 million in acquiring the lease and refurbishing the hotel to the new Travelodge budget-luxe premium look hotel design.

The Travelodge budget-luxe design 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. Work will commence in May 2023 and the hotel will remain open during this period with an official opening scheduled for this summer.

Travelodge already operates a successful lease hotel model in Spain and Travelodge Madrid Coslada Aeropuerto, will be the group’s sixth hotel in Spain – and its third Travelodge in Madrid. The group also operates two hotels in Barcelona and one in Valencia. With the addition of this new hotel, Travelodge now operates nearly 600 hotels across the UK, Ireland and Spain.

Steve Bennett, Travelodge, Chief Property & Development Officer said:

“We are delighted to launch our Spanish expansion programme by acquiring the lease of the NH Villa de Coslada hotel in Madrid and appointing Aldaba Partners to help us grow our business across Spain. The Spanish hotel market is growing at pace with demand exceeding supply and we want to take this opportunity to take the Travelodge brand to new business and leisure locations across Spain.

With nearly four decades of expertise in operating budget hotels, a strong brand and a proven successful long term lease model in place, we can offer investors and landlords an alternative long term income stream in Spain. Whilst offering business and leisure travellers more choice and great value accommodation.”

Angel Beleno, Travelodge Spain General Director

The Travelodge Spanish operation is managed by Angel Beleno, who joined Travelodge in 2013 as Spain, Director of Operations and in 2014 was promoted to Spain, General Director. Angel has over 20 years experience of working within the hospitality sector in Spain and internationally. Prior to joining Travelodge, Angel worked for Melia Hotels International and Barceló Hotels and Resorts in Spain and Mexico.

London Docklands Travelodge – Opened July 2022

Travelodge announces record results for 2022

Travelodge has completed on a regear of its leases with LXi REIT. The mutually beneficial regear introduces capped rent reviews, rent smoothing and extending the leases by an average of nine years across 122 hotels

To support Travelodge’s sustainability plan, ‘Better Future’ – the updated leases include green lease provisions

Today, Travelodge, one of the UK’s largest hotel brands, which operates 595 hotels across the UK, Ireland and Spain announces record results for 2022 and the completion of a mutually beneficial lease re-gear with its largest landlord, LXI REIT for the majority of the properties in the 122 Travelodge hotel portfolio they acquired as part of Secure Income REIT merger in 2022.

Travelodge has delivered record financial results in 2022, significantly ahead of its previous best year in 2019. This performance reflected the strength and resilience of the UK budget hotel market which performed well in 2022, driven by strong levels of domestic leisure demand and a rapid recovery in ‘blue collar’ business demand, with a more gradual recovery in ‘white collar’ corporate demand.

UK like-for-like RevPAR growth outperformed the Smith Travel Research (STR) MSE benchmark competitive segment, marking the eight consecutive year of Travelodge outperformance.

Total underlying revenues for the year were up c. 25%, on 2019 levels and Travelodge delivered record profits in the year with EBITDA (adjusted) expected to be between £210m and £215m (2019: £129.1m, 2021: £81.1m)(unaudited).

The strong leisure and ‘blue collar’ business demand has continued in the first weeks of 2023, as customers continue to prioritise travel and seek out value in tough economic times.

We are also pleased to confirm that the administrators have issued their final report, confirming the CVA has now been fully implemented and is now formally at an end. Based on the expected EBITDA range above, reflecting Travelodge’s excellent 2022 trading performance, we now expect to make a one-off payment under the excess cumulative EBITDA landlord rent payment clause shortly after we publish our 2022 audited annual report and accounts. We thank our landlords for their support and look forward to continuing to work together.

On 27 January 2023 we completed on our lease regear with LXI REIT plc on 97 of the 122 Travelodge hotels which they acquired as part of the Secure Income REIT acquisition, with the remainder subject to agreement by the superior landlords.

As part of the LXI lease regear, Travelodge has negotiated new caps and collars on rent reviews to limit rental increases during high inflation periods and lease extensions averaging 9 years for all 122 hotels. Previously the rent increases were based on uncapped RPI, but have now been converted to CPI+0.5% with a cap (maximum uplift) of 4% and a collar (minimum uplift) of 1%.

The regear also includes rent smoothing across the portfolio, resetting rent levels for the 122 Travelodge hotels to reflect the trading performance of each site. The total rent across the hotels remains the same, but has been smoothed on a site by site basis, to ensure that each hotel has a robust stand-alone rent cover.

Also new green lease provisions have been added to support Travelodge’s sustainability plan, ‘‘Better Future’. This includes:

● Sharing of energy, water, recycling and waste data.

● Co-operating on the environment, social and governance strategies of the landlord and tenant.

● Future proofing the leases to ensure the landlord has the necessary rights to enter the properties to make environmental performance improvements.

This lease regear also provides a secure long term, fixed-rate income for LXI REIT and is expected to have a materially positive impact on their Travelodge hotel asset portfolio and further enhance the investment attraction of these hotels.

Jo Boydell, Travelodge, Chief Executive said:

“We are delighted to announce record results for 2022, with our eighth consecutive year of RevPAR growth outperformance against our competitive segment and EBITDA significantly ahead of 2019 levels. Strong trading has continued into the first few weeks of 2023 with leisure and ‘blue collar’ customers continuing to prioritise travel and seek out value in tough economic times.

“We are also very pleased to confirm the completion of a mutually beneficial lease re-gear with our largest landlord, LXI REIT, which caps future rent increases and includes green lease clauses to support our sustainability plan “Better Future”.”

Month: February 2023

Travelodge is expanding its Spanish hotel portfolio by opening a new hotel in Madrid and appointing Aldaba Partners to find new hotel sites across Spain

Travelodge announces its trading update for 2022 and confirms completion of a lease regear with its biggest landlord LXI REIT

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