Travelodge rides staycation wave

London Waterloo Central Travelodge
London Waterloo Central Travelodge. (Travelodge)

Insight Comment
It was a good summer for Travelodge but now comes the challenging part. Will enough business demand be there to replace leisure travel and what does the emergence of the new Omicron variant mean?

Travelodge has reported an improved Q3 revenue performance compared with Q3 2019 as it benefited from robust demand for domestic travel.

Total revenue for the period rose 9.9% to £229.5 million with profit (EBITDA) of £134 million (versus £111.5 million in 2019 and £31 million in 2020).

Forecasting future business performance remains challenging, especially in light of the emergence of the new Omicron variant. Travelodge said economic recovery would depend on several factors including the continued effectiveness of the vaccines, consumer and business behaviour and more broadly the general economic environment.

Travelodge opened 15 new hotels during the period but interestingly said it would only open six new properties next year, lower than its long-run averages, as new deals were impacted by Covid-19 in 2020. 

What They Said

Craig Bonnar, CEO, said: “Following the lifting of all Covid-19 restrictions Travelodge has delivered a record trading performance in quarter 3. We saw a significant increase in demand post 19 July, with very strong levels of domestic leisure demand across the UK this summer, good ‘blue collar’ business demand and we also benefited from the reduced VAT rate. 

“The budget segment continues to recover ahead of the total UK market, and Travelodge has continued its seven-year track record of outperformance against the market segment. Whilst forecasting remains a challenge, and we continue to face a range of possible outcomes, we expect to return to 2019 RevPAR levels during 2022, driven by continued leisure and ‘blue collar’ business demand offsetting a slower recovery in ‘white collar’ corporate demand.  

"With our large network of hotels stretching the length and breadth of the UK, a strong brand heritage which appeals to a wide mix of customers and our low cost business model, we are well positioned to benefit from the on-going recovery and future growth opportunities. So, whilst we do continue to face uncertainty in the short-term, we remain confident in the long-term prospects for budget hotels."