Travelodge, the budget hotel chain, reported trading in the first three months of 2023 has been “strong” and now expects to benefit from customers downtrading throughout the rest of the year, a trading update revealed.
Benefiting from consumers looking to save money and holiday in the UK, the privately-owned firm believes its mix of business and leisure as well as its low price point will help drive strong trading, having just experienced a record 2022, which in turn should boost sales prospects.
Sales for the year to December 2022 rose 25% to reach £909 million, helping lift underlying earnings by just under £84 million to around £213 million – both of which were the highest ever reported by the company.
Jo Boydell, chief executive at the Travelodge, said: “The market recovered, with strong demand for events and short staycation breaks throughout the year as well as for essential business travel and we continued to outperform the Midscale and Economy segment.”
“Whilst the current macro-economic environment creates some uncertainty, the budget hotel segment has proven resilient… Looking ahead, we remain confident in the long-term prospects for Travelodge and excited about our future growth opportunities.”
Planning to open hotels in 300 locations across the UK, the group said it may need to wait until some headwinds subside before it can continue with a “normal level of openings”.
Challenging real estate conditions and the impact of Covid means Travelodge expects to only open eight new hotels this year, with new openings being targeted for Spain - the first opening in the country for 10 years.
Listed industry rivals like Whitbread, which owns Premier Inn, and Holiday Inn owner IHG may have some stiffer competition on their hands now.
Much of the sector has shrunk, with independents suffering the brunt of closure, meaning a battle for market share could be hotting up.