Travelodge eyes major expansion after five-year turnaround
By Abigail Townsend
Date: Monday 18 Mar 2019
(Sharecast News) - Travelodge hailed its turnaround on Monday, as annual revenues jumped, and unveiled plans to open another 100 hotels despite the current "uncertain" economic climate.
The privately-owned budget chain said total revenues rose 8.8% in 2018, to £693.3m, with like-for-like revenues per available room - a key industry metric - up 3.2% at £41.69. Adjusted underlying earnings rose £9.6m to £122m.
The company said the strong growth had allowed it to mitigate "significant costs increases", including those associated with improved occupancy, business rates and the minimum wage.
Peter Gowers, chief executive, said: "These are uncertain times and we are not immune from the short-term challenges, but beyond, we remain confident that there are more opportunities ahead."
Gowers said the results highlighted Travelodge's transformation over the last five years, during which time sales rose by more than £250m, the chain opened 60 hotels and profitability "trebled".
He continued: "The long-term growth opportunities for the budget sector remain strong and we expect to open 100 new hotels over the next five years, creating approximately 3,000 jobs."
However, Travelodge - which came close to collapse in 2012 after debts soared - conceded that the short-term outlook was less clear.
"The UK economic situation remains uncertain, and there are well documented cost pressures facing the wider sector, which together lead us to maintain a cautious short term outlook." In the first eight weeks of the current year, RevPAR fell 2.3%, with relatively strong London trading offset by a weaker performance outside of the capital.
The first quarter of the year is typically the chain's smallest in terms of revenues and occupancy rates.
Gowers also said that Travelodge would actively seek to recruit parents who were looking to return to work, as it prepares "in earnest" for a post-Brexit Britain. The hospitality sector relies heavily on immigrant workers.
Travelodge is one of the UK's biggest hotel chains, with 575 properties.
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