Travelodge is one of the UK’s largest and fastest-growing independent hotel groups and is the second biggest player in the budget sector. While the bulk of its hotels are in the UK, it has a franchised collection in Ireland and a growing presence in Spain.
The group, which is owned by Avenue Capital Group and Golden Tree Asset, has ambitious plans to grow to 100,000 rooms across 1,100 hotels by 2025 – as well as 100 smaller 20- to 40-bedroom hotels under the new ‘Metro’ concept unveiled in 2011. It aims to have 100 properties in Spain by 2020.
Travelodge was founded in the USA in 1939 and acquired in 1973 by Forte (which sold off the US arm in 1995). Forte opened the first UK Travelodge in 1985 alongside its Little Chef roadside restaurant on the A38 at Barton under Needlewood, which was the UK’s first branded budget hotel.
In early 1996, Granada acquired the 127-strong chain in a bitterly-fought £3.8b takeover of Forte. Travelodge had 195 sites when Compass became its owner following its £1b merger with (and swift demerger from) Granada in 2000/2001.
Travelodge was sold again in 2002 to venture capital firm Permira (along with Little Chef, which Permira offloaded in 2005) and its new owners grew it from 220 to 291 sites before selling the chain to Dubai International Capital (DIC) in 2006 for £675m.
The acquisition landed Travelodge with a burdensome £850m debt structure which left it vulnerable to administration in 2012, the year it opened its 500th hotel. The solution was a takeover by two of its two financial backers and a Company Voluntary Arrangement with creditors that reduced the debt burden and injected £75m capital into the company. The deal involved selling 49 hotels and reducing rent on 109 more.
Early Travelodges were 20 to 40-bedroom new-builds on trunk roads and motorways, alongside Forte-owned roadside restaurants such as Little Chef, Happy Eater and Harvester and its Welcome Break motorway service areas.
This changed in 1994 when Travelodge bought its first hotel conversion and biggest hotel to date, the 121-bedroom Gatwick Concorde hotel. Since then, the group has expanded rapidly into key cities and towns with a mix of new- builds, office and other conversions, and acquisitions.
The group explored innovative ways to drive its growth. It was one of the first major UK hospitality companies to adopt the sale-and-leaseback approach (in 2004) and has forged relationships with franchise partners, supermarkets, pub groups, local authorities and investment funds to further its growth – even offering the public a bounty to find sites.
Other innovations include offering one-hour room rental for sleepy motorists, appointing the world’s first sleep director, adopting speed interviews to recruit staff, and using modified shipping containers to cut the cost and construction time of new-build hotels.
Travelodge has been a high-profile champion of the hospitality industry (for instance, spearheading a campaign against a proposed bed tax). It has been equally forward-thinking in its recruitment and training activities, hiring the long-term unemployed and offering hotel management foundation degrees and apprenticeship programmes (a first in the budget sector.)
Chairman Brian Wallace
Chief operating officer Jon Hendry Pickup
Managing director, international and development Paul Harvey
Chief financial officer Jo Boydell
Total number of hotels 513 (November 2014) including 11 franchised properties in Ireland and five hotels in Spain
Number of employees more than 9,000
Pre-tax profit/loss -£56.8m