Financial results for the year ended 31 December 2023
- Record performance with revenue surpassing £1 billion for first time: total revenue up 13.7% to £1,035.2m (2022: £910.8m); EBITDA (adjusted) up 14.6% to £243.9m (2022: £212.9m)
- Performance driven by strong customer demand: record-breaking trading days and weeks including Wimbledon, driving highest ever revenue in London; Eurovision, Travelodge’s biggest event of the year; and face-to-face business conferences such as the Defence and Security Equipment International (DSEI) conference, driving Travelodge’s busiest week in H2 2023
- Continued investment to strengthen brand and drive growth: new multi-channel brand campaign launched in September 2023, Travelodge’s first since 2016; acceleration of refit programme – Travelodge’s most significant brand transformation to date – with plans to upgrade 50% of room estate to new design by end of 2024
- Positive trading patterns continuing into FY24 and Travelodge well positioned for growth: first quarter accommodation sales modestly (approximately 2%) ahead of prior year; continued investment in the business with opportunities for further growth in the UK and Spain
Jo Boydell, Travelodge Chief Executive, said: “I am delighted that Travelodge has delivered another record performance in 2023, with revenue above £1 billion for the first time. Our results reflect the hard work and commitment of our teams and the underlying strength of our business. We saw several record-breaking trading days and weeks during the year, with highlights including Wimbledon, driving our highest ever revenue in London, and Eurovision, our biggest event of the year, as well as strong demand for networking at business conferences and trade fairs, such as World Travel Market which saw over 40,000 people attend.
Travelodge is well positioned in the budget hotel sector, with robust demand from our diverse mix of leisure and business customers who choose to stay with us for quality, affordable accommodation. We continue to invest in strengthening our brand proposition and driving future growth. Since launching our first new brand campaign for seven years in September 2023, we have seen a positive customer response, including improved brand awareness and consideration. Additionally, our hotel refit programme – our most significant transformation to date – saw 25% of the room estate refitted by the end of 2023 and we have plans to accelerate the programme to upgrade half of our rooms by the end of 2024.
In the first weeks of 2024, we are encouraged that in a traditionally quieter period, overall accommodation sales and forward bookings are ahead of 2023 levels. While we remain mindful of the challenging macroeconomic backdrop, including ongoing cost inflation, we are continuing to invest in the long-term future of the business including the acceleration of our refit programme and exploring opportunities to open new hotels in both the UK and Spain.”
28 March 2024 – Travelodge, the UK’s first budget hotel brand which operates nearly 600 hotels, today announces record financial results for the year ended 31 December 2023, reporting revenue over £1 billion for the first time and profit significantly ahead of 2022 levels. The business delivered a 13.7% increase in revenue to £1,035.2m and a 14.6% increase in underlying earnings (adjusted EBITDA) to £243.9m, reflecting the strength of Travelodge’s business model and the resilient UK budget hotel market.
This strong full year performance, which included a number of record trading days and weeks, was driven by robust demand across Travelodge’s diverse customer base of leisure and business guests.
Leisure demand was consistently strong, driven by visits to friends and family, short breaks across the country, events such as Wimbledon, which drove Travelodge’s highest ever revenue in London, and Eurovision, the brand’s biggest event of the year.
Travelodge also benefitted from robust business travel demand across its diverse range of customers, from tradespeople to business executives and FTSE 100 company employees. This demand has been supported by face-to-face networking events, such as the Defence and Security Equipment International (DSEI) conference in London, driving Travelodge’s busiest week in the second half of 2023, and trade fairs, such as World Travel Market which saw over 40,000 people attend.
In what is traditionally a quieter first period, positive forward booking patterns have continued into 2024 and first quarter accommodation sales are modestly (approximately 2%) ahead of 2023 levels. Recognising this traditionally quieter period, Travelodge has deliberately invested to accelerate its hotel refit programme.
Investing for growth
Travelodge continues to invest in long-term growth, enhancing its proposition of providing a well-priced, well-located stay that customers can trust.
Travelodge’s refit programme, its most significant transformation to date, saw 25% of the room estate upgraded to the new design by the end of 2023. Travelodge has accelerated this programme following positive impacts on both commercial and customer metrics, with plans to upgrade 50% of its room estate by the end of 2024. The refit programme includes a new hotel design featuring a new style reception area, next-generation rooms with bedside charging ports and blackout curtains and upgraded bar cafes.
In September, Travelodge launched its multi-channel “Better get a Travelodge” brand campaign, its first brand advertising campaign since 2016. The campaign is focused on Being the Brilliant Base and has received an encouraging response from customers with early signs of improvement to brand awareness and consideration.
To deliver an attractive customer proposition and support quality, Travelodge continues to invest in revenue management systems, processes, and analytics capability, ensuring it can best match room pricing with customer demand. The business is also investing in its data capabilities and digital platform including adding enhanced search capabilities for customers and increased personalisation, helping to further optimise digital conversion.
At the end of February 2024, a newly formed property holding group, Travelodge PropCo Group, completed the acquisition of 66 Travelodge branded hotels from Travelodge’s largest landlord, LXi REIT, for £210m with support from its owner, GoldenTree Asset Management. The 66 hotels were acquired on a freehold and long-leasehold basis, as Travelodge Group seeks to optimise its hotel portfolio and diversify its freehold/leasehold split to enhance value.
Travelodge’s commitment to sustainability is outlined in its ‘Better Future’ plan, released in May 2023, with the 2024 report due in April, detailing its ambitions to become a more sustainable business. Environmental goals include improving the measurement of scope 3 emissions, a net-zero target by 2050, ensuring all new hotels meet leading building specification standards for sustainability by 2025, reducing average water use to 100 litres per guest by 2025, and increasing recycling rates year on year. Socially, Travelodge continues to have a gender-balanced board and aims to ensure equal gender representation in senior roles by 2025 and for 40% of head office promotions to be internal by the same year.
Hotel openings
Travelodge opened four new hotels in the period, including its first new hotel in Spain for over ten years. The pace of new openings reflects ongoing challenges in the market for development funding of new hotels and planning. Travelodge plans to open six new UK hotels in 2024.
Long-term growth potential remains significant, and Travelodge has identified over 300 target locations in the UK, with openings expected to return to more normal levels of development as market conditions improve, opening between 15-20 new hotels per year.
Spain continues to present significant development opportunities for Travelodge, with strong customer demand and low penetration of branded budget hotels. Travelodge has signed a deal for a new build hotel in San Sebastian and is working with its development partner to identify new opportunities initially across 20 key markets.
Outlook
While the macroeconomic backdrop remains challenging, including ongoing cost inflation, Travelodge expects to benefit from several positive demand drivers as customers seek good value, including continued staycation demand, working patterns and events. The business continues to invest in driving future growth and quality through the acceleration of its refit programme and opportunities to build new hotels in the UK and Spain. With a strong brand proposition, resilient underlying customer demand across business and leisure travel and an efficient operating model, Travelodge is well positioned for future growth.
ENDS
Enquiries:
FGS Global Tel: 0207 251 38 01
Jenny Davey Email: Travelodge-LON@fgsglobal.com
Anjali Unnikrishnan
About Travelodge
Founded in 1985, Travelodge is Britain’s very first budget hotel chain and today is one of the largest budget hotel chains in the UK, with a portfolio of nearly 600 hotels and over 46,000 bedrooms across the UK, Ireland and Spain.
Welcoming over 22 million guests annually, the majority of Travelodge hotels are located in major cities, towns and holiday hotspots as well as by airports and key business hubs. With 90% of its hotels rated 4* or above on TripAdvisor, Travelodge is proud to offer a diverse customer base a good value experience – whether travelling for business or leisure. In 2023 approximately 50% of rooms were sold for less than £60.
With a focus on helping people to go and do their thing by Being the Brilliant Base for all of life’s occasions, from celebrating a birthday and visiting the kids at university to taking a business trip or going to a concert or sports event, Travelodge concentrates on the essentials; a stay that is well-priced, well located and trusted to be spotlessly clean and well maintained, with a friendly team.
Travelodge continues to invest in its ongoing hotel refit programme which is expected to see 50% of the Travelodge room estate upgraded to its new design by the end of 2024. The brand is also continually evolving its quality offering to deliver a better experience for its diverse mix of business and leisure guests such as its new look Bar Cafe design, 85 Bar Café which has been rolled out to selected UK hotels as part of the refit programme.
Travelodge is focused on its impact on the environment and its social responsibilities. Its Better Future Sustainability Plan aims to help build a more sustainable future for its customers, colleagues, and the planet. For its 13,000 colleagues, Travelodge creates opportunities to learn more, earn more and belong. Travelodge also aims to ensure it is accessible, inclusive, and well-priced for customers. Travelodge is actively conscious of its impact on the planet, taking into account the waste it produces, the energy and resources it consumes and carbon emissions.
For further information visit travelodge.co.uk or the Travelodge Hotels Limited LinkedIn page.