Travelodge in the red amid Reeves’ £21m tax hikes
Travelodge has fallen to a loss during the first three months of its financial year as it battles the tax hikes announced by Chancellor Rachel Reeves in her Autumn Budget which will cost the hotel chain more than £20m this year.
The company confirmed last year that the rise in the National Living Wage will cost it around £12m while the increase in employers’ National Insurance contributions and reduction in the threshold will add an extra £9m to its tax bill in 2025.
Travelodge also warned that it will also face other cost increased in the rest of the year due to inflation linked rent reviews.
The hotel chain has revealed its revenue in its first quarter, the three months to the end of March, fell from £205.5m to £198.4m.
The business said that reflected “ofter UK market trading conditions, particularly in Greater London, where weaker rates and reduced demand impacted RevPAR [Revenue Per Available Room]”.
Travelodge also revealed that made an EBITDA [earnings before interest, taxes, depreciation and amortisation] loss of £8.4m in the quarter, down from a profit of £4.9m during the same period in 2024.
No further profit/loss figures have been released by the company.
On its second quarter, the chain said its market RevPAR has continued below 2024 levels, “with the weakest performance continuing to be in London due to softer rates, fewer events and reduced corporate demand”.
Travelodge hoping for Oasis, Beyoncé and Bruce Springsteen boost
Travelodge chief executive Jo Boydell said: “Travelodge has made good strategic progress in the first quarter, with our investments in growth and quality driving good occupancy levels ahead of the market.
“However, our performance in the traditionally most quiet quarter reflects challenging external market conditions, particularly in Greater London, where softer rates and reduced business travel impacted trading.
“We remain focused on driving growth, quality and efficiencies through strategic investments, including our hotel refit programme which has now seen c.60 per cent of our room estate upgraded, continuing to deliver both commercial and customer benefits.
“We are also making excellent progress with our development plans, with 11 hotels open to date and a further four hotels exchanged or completed across a range of freehold and leasehold models.
“This is alongside a growing pipeline in Spain, where our expanded portfolio is performing strongly.
“Looking ahead, despite macroeconomic uncertainty, we are encouraged by H2 forward bookings, a robust summer events programme featuring major stadium concerts like Oasis, Beyoncé and Bruce Springsteen, and early positive signs of returning business travel demand, particularly from the construction sector.
“With a clear strategy supported by a strong liquidity position, efficient operating model and well-invested hotel network, we are well-positioned for the future and excited about the growth opportunities ahead of us.”
On its future, Travelodge said it “sees both opportunities and challenges in the months ahead” despite the macroeconomic and political environment remaining uncertain”.
It added: “The business is encouraged by positive signs for the second half of 2025, including booked revenue being ahead of 2024, a robust events programme and improving construction demand.
“With a strong brand, efficient operating model and well-invested hotel network, the business is well-positioned for future growth and remains confident in the medium-term prospects for the budget hotel sector.”