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Budget hotel chain Travelodge has been hit by weak travel demand in London, as fewer live events, transport strikes and bad weather dragged down earnings.
The company, which is a leasehold business running 600 hotels across the UK, Ireland and Spain, said its operating unit posted a core profit of £89.2mn for the first six months of the year, down 9 per cent from a year earlier.
While occupancy grew by 2.2 percentage point to 84.8 per cent, its room rate slipped 2 per cent to £64.98, a contrast to a surge of 16 per cent a year before.
The decline was “mainly driven by London”, said chief executive Jo Boydell, adding that demand for midweek leisure travel in the capital, mainly from domestic tourists, was particularly weak.
While the period coincided with high-profile music concerts such as the first UK dates of Taylor Swift’s Eras Tour and sporting events such as the Six Nations Rugby, Boydell said there had been fewer events than in 2023, adding: “We have had a lot of train strikes in the first quarter, and some inclement weather.”
She said event-led demand has improved in the current trading, but “one key exception” was the Wimbledon tennis championships held in July — with attendance dropping in the first week due to heavy rain.
Budget hotels in London have suffered from a declining performance this year. The revenue per available room, a key metric for hotels, for the midscale and economy sector in London in April was down 8.3 per cent year on year, significantly lower than a 4.1 per cent decline for the UK sector as a whole in the same month, according to a Morgan Stanley report, which added that the recent trading is improving.
On top of external factors such as travel disruption and adverse weather conditions, London has also maintained its pre-Covid hotel supply, increasing competition.
Looking ahead, Boydell said that consumer confidence was coming back as the company was seeing “really strong bookings” for events sometime in the future.
But she warned that it was difficult to assess what the picture would be like for people planning a few weeks ahead — which comprises a majority of its bookings — adding that she does not expect “significant rate increases we saw over the last couple of years”.
Travelodge, owned by GoldenTree Asset Management, has been investing in refurbishment of its rooms. It spent £29mn during the six months period as well as £12mn on an advertising campaign and property management system upgrade.
