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”.”