Record Q3 performance with positive trading patterns continuing into Q4
Q3 trading update for the nine months ended 30 September 2023
Record performance with revenue and profits significantly ahead of 2022 levels: total underlying revenue up 16.7% to £782.0 million (2022: £669.9m); EBITDA (adjusted)1 profit up 22.4% to £201.2 million (2022: £164.4m)
Top-line growth driven by robust demand from business and leisure customers: strong leisure and sporting event bookings including Edinburgh Festival and Wimbledon Championships; strong business travel demand supported by face-to-face business networking conferences, including the Defence and Security Equipment International (DSEI) conference at ExCel London
Strong momentum continuing into Q4: positive trading patterns continued in the first weeks of the fourth quarter – with accommodation revenue approximately 6% ahead of 2022 levels
Continued investment in quality and growth: acceleration of hotel refit programme, Travelodge’s most significant brand transformation to date, with plans to upgrade approximately 50% of room estate to new design by end of 2024; multi-million-pound advertising campaign launched in September 2023
Jo Boydell, Travelodge Chief Executive, said: “I am pleased to announce a record performance for the quarter, reflecting continued demand from Travelodge's diverse range of leisure and business customers who seek affordable, quality accommodation.
"We continue to invest in our business to drive growth and strengthen our brand proposition. Our room and hotel transformation continues at pace – we will have refitted approximately 25% of the room estate by the end of this year, with plans to accelerate this investment to upgrade approximately 50% of the room estate by the end of 2024. We also launched our multi-million-pound “Better get a Travelodge” advertising campaign in September.
"We are encouraged to see the positive trading patterns continuing into Q4 as we benefit from staycations, event bookings and continued demand from customers seeking value for money. Travelodge's affordable proposition, together with our well-invested and diversified hotel network, positions us well to deliver long-term growth.”
23 November 2023 - Travelodge,the UK’s first budget hotel brand which operates nearly 600 hotels, today announces record results for the nine months to 30 September 2023, reporting revenue and profit performance significantly ahead of 2022 levels. The business delivered a 16.7% increase in revenue to £782.0 million and a 22.4% increase in underlying earnings (adjusted EBITDA) to £201.2 million, reflecting the continued resilience of the UK budget hotel segment and the wide appeal of Travelodge’s quality and value offering.
This strong set of results and continued outperformance against the competitive midscale and economy hotel segment was supported by strong demand from Travelodge's diverse customer base of leisure and business travellers.
There has been consistently strong leisure demand, whether visiting friends and family, taking short breaks across the country, or attending events such as Edinburgh Festival, sports events such as Wimbledon and the British Open, and various music festivals across the UK — including Reading Festival and Creamfields.
Travelodge has continued to experience robust business travel demand across its diverse range of customers, from tradespeople to business executives of FTSE 100 companies. This demand has been supported by face-to-face business networking conferences, such as the Defence and Security Equipment International (DSEI) conference at ExCel London.
In current trading, positive trading patterns have continued in the first weeks of the fourth quarter, with accommodation revenue approximately 6% ahead of 2022 levels and approximately 46% ahead of 2019 levels.
Brand investment and upgrade
Travelodge continues to invest in driving long-term growth, enhancing its proposition of location, price, and quality to suit all travel occasions.
Travelodge’s hotel refit program, the company’s most significant brand transformation to date, is well underway, with 25% of hotels on track to be upgraded to the new design by the end of 2023. The company plans to accelerate investment in 2024 to upgrade approximately 50% of the room estate by the end of that year. The refit program 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 2023, Travelodge launched its "Better get a Travelodge" multi-million-pound advertising campaign across TV, radio, digital, and out-of-home.
Additionally, Travelodge is making a series of operational investments to build on already strong quality metrics, including replacing thousands of carpets across the estate since 2022 and upgrading all coffee machines across the estate.
Hotel openings
Travelodge opened four hotels (308 rooms), as part of its expansion plans during the year to date.
The company opened its sixth hotel in Spain, located in Madrid, in October following the end of the period. This market presents significant development opportunities for Travelodge, with strong demand from both business and leisure travellers, and low penetration of branded budget hotels. The company’s market review supported by Christie's & Co identified the potential for an additional 15,000 branded rooms in the budget segment within the next five years. Travelodge has already 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.
In the UK, Travelodge expects to open six new hotels in 2024. Once market conditions improve, the company anticipates returning to more normal levels of development, opening between 15-20 new hotels per year. Travelodge continues to see significant growth opportunities in the UK, with over 300 target locations identified following a comprehensive review of gaps in the market. Additionally, the company will continue to review extension opportunities across its existing estate.
Positive demand drivers ahead, Travelodge well positioned
Looking ahead, Travelodge expects to benefit from several positive demand drivers across both business and leisure customers, including increased demand for budget hotel accommodation as customers seek value, as well as benefits from staycation demand, events and, indirectly, from inbound tourism.
The company's strong brand, quality and value proposition, well-invested hotel network, and diverse mix of business and leisure customers position it well to deliver growth. Although the wider macroeconomic backdrop in the UK is challenging and somewhat unpredictable, Travelodge remains confident in the long-term prospects for budget hotels, and its business model and track record of performance provides confidence in its ability to continue to prosper amidst this uncertainty.
ENDS
Enquiries:
FGS Global Tel: 0207 251 38 01
Jenny Davey Email: Travelodge-LON@fgsglobal.com
Anjali Unnikrishnan
About Travelodge
In 1985, Travelodge became the UK's first budget hotel brand when it opened its first hotel at Barton-under-Needwood. Today, we operate nearly 600 hotels across the UK, Ireland and Spain and annually welcome over 21 million guests.
With rooms from £38 or less, Travelodge is the ideal base for all business and leisure trips and we aim to offer customers the location, value and quality to suit all their travel needs.
We are currently looking to expand our UK hotel network and we have identified a further 300 locations where we would like to open a Travelodge hotel.
Travelodge employs over 12,000 employees and is dedicated to creating an environment where everyone can learn more, earn more and belong.