Travelodge Group Q3 performance in line with expectations against the market backdrop

• Q3 revenue growth of + 0.5% to £786.1 million (2023: £782m) driven by opening of five new UK hotels in London Bermondsey, Rotherham, Colchester, Bristol and London Oval and performance in Spain including five new freehold Spanish hotels, with resilient UK customer demand from leisure and business customers driving a slight increase in occupancy, offset by a decline in room rates
• Group comparable EBITDA of £187 million, whilst continuing to navigate ongoing inflationary cost increases, including successive increases in the National Living Wage, rent reviews and higher energy costs
• Expanded and optimised property portfolio: opened five new UK hotels in YTD; agreed to acquire six hotels in April 2024 (with five completed to date) doubling Spanish presence; and post period end acquired St Paul’s office building for hotel conversion
• Improved trading in recent weeks: recent trading just slightly below 2023 levels, forward booking patterns are positive, with strong long lead event demand and booked revenue ahead of 2023

Travelodge has performed in line with expectations against the market backdrop, benefitting from solid customer demand from a diverse mix of both business and leisure customers. Occupancy was slightly ahead of 2023 levels but there was softer market rate, particularly in London. We continued to invest in the business, while navigating the impact of inflationary cost pressures. Bookings in the quarter were supported by leisure events such as Wimbledon, the British Grand Prix, Kings of Leon and Justin Timberlake music concerts, as well as business meetings and events such as the European Society of Cardiology (ESC) event at ExCeL London and the Farnborough International Airshow.

We continued our strategic investment in growth and quality during the period, including accelerating our refit programme – our most significant brand transformation to date, with 50% of our rooms to be refitted by the end of this year, supported by our multi-channel advertising campaign.

We have opened five new hotels in the UK and acquired five freehold hotels in Spain in the year to date, doubling the presence of our highly profitable Spanish business. Post-period, we also completed the acquisition of a prime freehold office building in St Paul’s, London, for hotel conversion. We see increasing growth opportunities, including potential going concern acquisitions and rebrands in the UK and Spain, building on our strong track record of delivery, as well as further freehold acquisitions to enhance value.

Trading in the fourth quarter is modestly below 2023 levels but shows an improving trend with the most recent weeks just slightly below 2023 levels. Forward booking patterns are positive, with strong long lead event demand and booked revenue for the remainder of the year ahead of 2023. While macroeconomic uncertainty persists amidst a challenging operating environment for the sector, we remain confident in the long-term prospects for the budget hotels and future growth opportunities for Travelodge. Our strong financial position, affordable proposition and diversified hotel network positions us well for long-term growth. Jo Boydell, Travelodge Chief Executive

Travelodge Group, the UK’s first budget hotel brand which operates more than 600 hotels, today announces its results for the nine months ended 30 September 2024. Travelodge delivered a 0.5% increase in revenue to £786.1 million (2023: £782 million), reflecting resilient market demand from its diverse range of leisure and business customers, albeit with a more challenging rate environment. The Group reported a comparable Group EBITDA of £187 million and Travelodge OpCo delivered a comparable EBITDA of £178 million (2023: £195.2m), while navigating ongoing inflationary pressures, including successive increases in the National Living Wage, rent reviews and energy costs.

During the period, Travelodge continued investing to drive growth and quality. This includes Travelodge’s refit programme – the Group’s most significant brand transformation to date – which will have refitted c. 50% of the room estate by the end of 2024 and is delivering positive commercial and customer benefits. The Group’s multi-channel advertising campaign is having a positive impact, including driving traffic to the website and improving brand metrics.

Overall, demand from Travelodge’s diverse range of business and leisure customers remains resilient. The regions performed well, with occupancy ahead of last year and rates broadly in line. London saw weaker performance due to lower rates and the deliberate phasing of the accelerated refit program. Despite poor weather and fewer events, leisure guests used Travelodge’s affordable and high-quality accommodation as a base for major events like Wimbledon, the British Grand Prix, and Kings of Leon and Justin Timberlake music concerts, while business guests attended meetings and industry events such as the European Society of Cardiology (ESC) event at ExCeL London and the Farnborough International Airshow.

Early Q4 trading was impacted by poor weather and fewer events in October, but recent weeks show improvement, just slightly below 2023 levels, with the Regions ahead, but London still behind on rate. Forward booking patterns are positive with strong long lead event demand and booked revenue to the end of the year ahead of 2023.

Continued growth and optimisation of portfolio in UK and Spain

Travelodge has opened five new hotels in the UK in the year to date, including London Bermondsey, Rotherham, Colchester, Bristol, and London Oval. The business expects to open five additional new UK leasehold hotels in 2025.

In Spain, Travelodge is focused on expanding its strong and profitable presence in the market, driven by acquisitions together with good leisure and business demand. In April, Travelodge agreed to acquire six freehold hotels, doubling its presence to 12 hotels, with five of the six now completed and trading under the Travelodge brand and the sixth due to complete by the end of the year.

In November, Travelodge acquired a 24,000 sq. ft. Central London office building in St Paul’s for conversion into a 95-room hotel, pending planning permission. This first, standalone freehold acquisition supports Travelodge’s strategy to diversify its freehold/leasehold mix to enhance value, while sustainably repurposing vacant buildings and bringing them back into economic use.

Travelodge has visibility of potential additional growth opportunities, including freehold and leasehold going concern opportunities in the UK and Spain, building on its strong track record of delivery, and further freehold acquisitions.

Outlook: resilient customer demand, good cost control and clear growth plans

Looking ahead, despite macroeconomic uncertainty, Travelodge is confident in the long-term prospects for budget hotels and its future growth opportunities.

The recent Budget confirmed that the National Living Wage will increase by 6.7% from April 2025, following the c. 10% increase in April 2024, increasing costs by c. £12 million. In addition, employer National Insurance contributions will increase by 1.2% to 15% from April 2024, alongside a reduction in the threshold that employers start to pay National Insurance, from £9,100 to £5,000 that is expected to increase costs by c. £9 million. We estimate the combined impact of these wage cost changes to Travelodge in 2025 is c. £21 million.

Travelodge is confident in its strong operating model, continuing its cost efficiency program to mitigate these pressures as much as possible. The business continues to incorporate technology to enhance the guest and colleague experience and drive operational efficiency, including the roll out of robot vacuums to improve quality, reduces physical demands on colleagues and increase efficiency.

Overall, customer demand is resilient across our range of business and leisure segments. Coupled with favourable UK market supply dynamics, Travelodge is optimistic about the future trading environment. The business remains focused on leveraging its growth levers, including through further freehold acquisitions in the UK and Spain. With a strong brand, direct distribution model, resilient demand, well-invested hotel network and efficient operations, Travelodge is well positioned for success.