Travelodge eyes expansion after business trade lift

Travelodge said it planned to boost its expansion plans by building 45 hotels over the next two years. Picture: PA

The budget chain, which has opened more than 500 hotels since launching in 1985, said earnings rose 19 per cent to £90.1 million in the six months to the end of July, compared with a year earlier, helped by strong business traveller numbers.

During the period, it opened five hotels, bringing the estate up to 519 hotels, or 38,665 rooms, in the UK, Spain and Ireland.

The business – now undergoing a £100 million modernisation – said it would speed up its development programme, adding 45 hotels, or over 3,600 rooms, over the next 24 months.

Travelodge added that it had appointed Deutsche Bank to advise it on its long-running plans to float the business at an estimated value of £1 billion – three years after its near-collapse.

The chain’s owners Goldman Sachs, Avenue Capital and GoldenTree Asset Management took control in 2012 after Travelodge faced the threat of collapse under a £500m debt mountain.

Chief executive Peter Gowers, pictured, said: “Our development momentum is beginning to accelerate. We have already exchanged contracts for more new rooms in the first half of 2015 than we did in the whole of 2014.

“Boosted by our strong trading and the attractions of the value segment, major developers and financial institutions are showing their confidence in the future of new Travelodge.”

He added: “Our shareholders are not natural long-term holders of a hotel business and they are working with Deutsche Bank to explore their options for the future.

“While that takes place we continue to focus on driving the business forward and building on the great momentum seen in our performance so far this year.”

The firm did not give a timetable on its expected flotation that has been the subject of City speculation for some time.

Yesterday’s results also revealed that revpar – an industry indication of profitability – was up 15.2 per cent to £35.87, year-on-year, which the company said was ahead of the market.

The average room rate rose 11.4 per cent to £48.19 while the average occupancy rate was up 2.4 points to 74.4 per cent.

Travelodge, which ranks as the biggest operator in Edinburgh for rooms, said “quality and consistency” were driving strong growth from business customers. It faces stiff competition in the budget sector from Whitbread-owned Premier Inn – also expanding.

l The latest monthly LJ Forecaster – released today – shows contrasting fortunes for hoteliers in Scotland’s three largest cities.

Demand was strong in both Edinburgh and Glasgow last month, but Aberdeen, once again, performed poorly.