Business customers make up half of Travelodge clients as hotel chain bounces back

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The company said it was the first time since its financial restructuring in 2012 that business travellers had represented such a strong proportion of sales and this contributed to the 2.5 per cent rise in revenue per available room – a key industry performance metric – to £39.34, compared with a 1.4 per cent rise by its main competitors.

Travelodge noted the growth rate in the UK hotel market was slower than the prior year with a weaker London market offset by better performance in the regions, the Telegraph reports.

This pushed the level of occupancy in its hotels down slightly to 76.1 per cent from 76.6 per cent in 2015 but the average price it charges for its rooms rose 3.1 per cent to £51.70. This was thanks to the aforementioned business customers and the fact its overhauled website is leading to a larger number of customers booking a room once they visit the site.

The near 7 per cent rise in total group revenue to £597.8m was also fed by a 14 per cent uplift in food and drink sales. Management has been working to encourage more of its guests to stay on site and eat by upgrading its breakfast offer. It now has 160 hotels with on-site restaurants.

Tight cost control also meant operating profits rose nearly 5pc to £110.1m.

Peter Gowers, Travelodge chief executive, said the UK still had a lower number of low-cost hotels than other major international markets such as the US and France and so the company was planning to open an average of 20 hotels each year for the next three.

He acknowledged “increased cost pressures” from the National Living Wage as well as business rates but thought the company would benefit from attracting business customers who wish to reduce their travel costs as well as people opting for so-called staycations in the UK because the pound’s fall has made travelling to some foreign destinations more expensive.

In March, Travelodge announced its largest ever hotel would form part of its next wave of expansion in yet another sign the low-cost player is putting its high-profile restructuring behind it.

Construction has started on the 395-room flagship hotel on London’s Middlesex Street, close to the iconic Gherkin, which will open in 2018.

The company’s huge debt pile led to a restructure in 2012 that saw turnaround specialists GoldenTree Asset Management, Avenue Capital and Goldman Sachs take control of the company from Dubai International Capital in a debt-for-equity swap.

The trio ploughed £75m into the company and in 2013, former Hilton deputy chief executive Brian Wallace was installed as chairman while Mr Gowers, who had previously held senior roles at Holiday Inn owner InterContinental Hotels, joined as chief executive later that year to help spearhead the turnaround.

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