Travelodge has updated on results for the six months ended 1 July 2015. Peter Gowers, Travelodge Chief Executive comments on the results below, but has also indicated that the owners are now considering the future:
“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.”
On the trading results:
“Customers are responding well to the upgraded quality levels driven by our £100m modernisation programme. Businesses are choosing Travelodge in ever larger numbers and families have welcomed the introduction of separate beds for children.
“Our development momentum is beginning to accelerate. We opened 5 hotels in the first half of the year and we expect to open a further 45 over the next 24 months.
“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 performance and the attractions of the value segment, major developers and financial institutions are showing their confidence in the future of new Travelodge.
“Britain continues to be a nation of value seekers and the value hotel market continues to be the fastest growing part of the UK hotel industry. New Travelodge is well positioned and we expect our strong trading momentum to continue into the second half of the year.”
Financial Highlights
- RevPar up 15.2% to £35.87 (2014: £31.14); outperforming the market
- Average room rate up 11.4% to £48.19 (2014: £43.27)
- Occupancy up 2.4 percentage points to 74.4% (2014: 72.0%)
- Total revenue up 17.9% to £261.0m (2014: £221.3m)
- LTM EBITDA£90.1m (March 2015: £75.7m)
Operational Highlights
- 92% of UK guest rooms now modernised
- Modernised hotels have average Trip Advisor rating greater than 4 out of 5 stars
- Quality and consistency driving strong growth from business customers
- Children’s beds driving higher occupancy from modernised family rooms
- Excellent reaction to new ‘That’s Travelodgical’ advertising
- New mobile app leading to improved booking conversion levels
- Five new hotels opened in first six months of year
- 45 hotels and 3,600 rooms scheduled to open in next 24 months
- Accelerating pace of new hotel contract signings
Financial review
For the six months to 1 July 2015 financial results (unaudited) were as follows:
- RevPar was up 15.2% to £35.87, again outperforming the Smith Travel Midscale and Economy Sector growth, which was up 9.6% for the same period.
- Significant further growth from business customers was the principal driver of improved performance. The increasing appeal of the modernised estate led to occupancy up 2.4 percentage points, to 74.4% (2014: 72.0%). Together with effective yield management this improved performance resulted in an 11.4% increase in average room rates to £48.19 (2014: £43.27). Total revenues were up 17.9% to £261.0m.
- Costs remain tightly controlled and EBITDA for the twelve months to 1 July 2015 was £90.1m. This represents a significant further increase on the position at the end of the first quarter, when LTM EBITDA stood at £75.7m.
Operational Review
In this 30th anniversary year, the new Travelodge strategy is being delivered:
- Continued investment in the quality and consistency of hotels. The new Travelodge Dreamer beds have been installed in every UK hotel and 92% of UK guest rooms are now modernised with the new look and feel. Average Trip Advisor scores for the modernised hotels are now greater than four out of five stars.
- The Travelodge brand continues to strengthen. Customer reaction to the new ‘That’s Travelodgical’ campaign has been excellent and brand recognition is now approximately 90%. Travelodge.co.uk now receives an average one million visits per week with a booking made on average every three seconds.
- launched the new mobile app in May, featuring a new tool to allow customers to find the nearest Travelodge while travelling, and get immediate walking or driving instructions to it. More than 85,000 customers have already downloaded the app and booking conversion rates for customers using the mobile app are significantly ahead of previous mobile website levels.
- With a combination of strong brand and excellent web presence, approximately 90% of all bookings now come via the direct channels.
Development
Five new hotels and 435 rooms opened in the first six months of 2015, bringing the total number of rooms in the business to 38,665. The new hotels extend presence across the country to London Wembley, Southampton, Egham, Winnersh in the M4 tech corridor and Llandudno in North Wales. On track to meet the development milestones for 2015 and expect to open 45 hotels and more than 3,600 rooms over the next 24 months.
During the first half of 2015, contracts were exchanged for almost 50% more rooms than were exchanged in the whole of 2014.
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