Entertainment events drive demand for Travelodge hotels in the UK

LONDON – Travelers from the United Kingdom are unwilling to sacrifice entertainment and experiences due to inflation and cost of living crises, but they are choosing their hotel stays more judiciously, said Martin Robinson, executive chairman of British budget hotel brand Travelodge Hotels since April 2021.

He said headline entertainment acts like Ed Sheeran and Coldplay are key drivers of occupancy at his brand’s hotels. Guests are willing to carpool to reach these shows and share accommodation before and after.

Robinson, who is also chairman of Parkdean Resorts, a vacation rental company, and sits on the board of directors of Disneyland Paris, said he believes budget and luxury hotels are “best placed to have a good 2023.”

Robinson was CEO of the European operations of holiday park accommodation company Center Parcs for 17 years and chaired the UK division.

“People are spending money, the money they have saved, but in different ways,” he said.

Robinson said consumer spending habits are changing in other industries as well.

“They fly Ryanair and EasyJet and they drive Daihatsu. That means they’re buying the basics,” he said.

He pointed to $200 billion in consumer money that he said didn’t exist before the pandemic, adding: “There are 8 million homes in the UK that aren’t mortgaged.”

Such mega-events as the Glastonbury Festival of Music, canceled in 2020 and 2021 due to the pandemic, and a packed calendar of sporting events have helped boost domestic tourism and TravelodgeBottom line in 2022, he said.

“We’ve seen more gain through the end of August 2022 than all of 2019. It’s 50% leisure and 50% business travel, encompassing dozens of different user categories, all balanced by dynamic pricing with two or three different prices per day,” he said.

“[2022] It’s been a good year for White Van Man, but a bad year for government deals and we’re the largest supplier of hotel rooms to the government,” he added.

Occupancy at Travelodge hotels has also been improved by the company’s return-to-the-office policy.

“Some staff have moved far from London and now they’re back in the office, staying in a Travelodge hotel two or three nights a week,” said Robinson.

“We also see employees who drive to one of our hotels on a Thursday to arrive at 10 a.m. and then work here, bring their family and have a long weekend,” he said.

“Many [hotel firms] had a record year in 2022 and I think we will be close to that year 2023,” he said.

Goldman Sachs, GoldenTree Asset Management and Avenue Capital Group have owned Travelodge for more years than private equity firms typically own hotel companies and brands, Robinson said.

“We have great owners, but yes, they want out. Ten years is a long time but I keep telling them there are no deals in the UK. It’s not my fault. They expected an exit about six months ago,” he said.

Robinson said the window for hotel deals in the UK is getting tighter.

“That makes it difficult to keep management informed if something might happen,” he said.

Robinson said the media, “particularly the BBC,” has been overly bearish on the economy and consumer demand, which has weighed on consumer demand and spending.

“The world will not collapse in 2023. … We were served a cocktail of bad news in Britain. For example, monkeypox is the new COVID-19. Yes, there are issues, but there are things we can do to mitigate many of those challenges,” he said.

Labor, construction and business rates are Robinson’s top priority.

“There have been pipeline delays as construction companies collapsed, but we plan to reopen at 25 hotels a year.

“We recovered quickly from COVID-19, so why not do the same from this slump? We should be more positive,” he said, adding that the company currently has about 600 properties in operation and another 300 in the pipeline.

Some of Robinson’s solutions, or best practices, he said, are to recruit wisely and treat employees well, as you would your customers; Be flexible with employment models and schedules.

He said the government must also regulate business tariffs, which have been suspended for the moment but will come back.

Identity service provider checks, the government-mandated process to give non-British employees the right to work in the UK, are also mandatory, Robinson said.

“These reviews last 12 weeks, a long period of time where you risk losing potential employees,” he said.

About 35% of Travelodge hotels have affiliated restaurants, and Robinson said hiring staff for them is a particular challenge because menu prices aren’t inflated relative to inflation.

“We’ve seen increases of 20%, 30%, 40% [food and beverage] costs and we couldn’t get more than 5% or 6% as a price increase. We will have to pass these cost increases on to customers in the longer term,” he said.

Robinson said the average daily rate could be raised if Travelodge’s main UK competitor does the same.

“We are Premier Inn’s number two, but we benefit from its presence and size. Our disadvantage is that we have a tenant model, but if they increase their rates, we can do that too.

“The UK is unusual in that it has two big economy brands that dominate the market,” he added.

Much has changed at the top echelons of Travelodge over the past 18 months, with Craig Bonnar being appointed CEO in May 2021, a month after Robinson took up the role. A year later, Bonnar resigned and Jo Boydell assumed the role of CEO, promoted from her position as chief financial officer, which she started in March 2013.

As of June 2021, the position of Chief Operating Officer has been filled by Claire Good, previously the company’s Director of Central Operations.

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