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Travelodge records surge in profits

Article By: ,  Financial Analyst
April 14, 2015 12:27 PM

Travelodge's recovery is continuing at a pace as the budget hotel chain posted a surge in profits.

The company, which was teetering on the brink of collapse three years ago, announced underlying profits of £66.2 million for the year to December 31st 2014. It represents a 63.5 per cent increase from the same period 12 months earlier and has fueled speculation that Travelodge owners are preparing to sell the brand.

Goldman Sachs, Avenue Capital and GoldenTree Asset Management assumed control of Travelodge in 2012 after it had accrued debts of around £500 million. However, this strong performance in recent months suggests that it could be possibly sold for a potential £1 billion in the future.

Alongside the positive profits, Travelodge stated that revenue was up 14.9 per cent to £497.2 million while revenue per room jumped 16.8 per cent to £34.24. The company is now looking to invest and confirmed that its £100 million modernisation programme is nearing completion with 90 per cent of UK guest rooms now modernised with a new design.

Peter Gowers, Travelodge chief executive, said: "The momentum we saw in 2014 has continued into the new year and we have seen an encouraging start to 2015.

"The value hotel market remains strong and we continue to outperform our competitive set. We see considerable potential for further like-for-like sales growth and are targeting the roll out of the brand to at least 250 further sites across the UK."

Expansion

With growing profits, Travelodge has been able to expand and moved into new territories such as Ireland and Spain. The company confirmed that it is looking to open 15 new hotels with a further 1,300 rooms in the next 12 months, building upon the 38,430 rooms it currently offers across its portfolio.

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