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Hotel chain Travelodge plans £1bn sale as revenue spikes 18 per cent

4 min read

20 July 2015

Former deputy editor

Independent hotel chain Travelodge experienced a 17.9 per cent year-on-year revenue growth in H1, which has prompted the company's owners to consider packing its bags with a £1bn sale.

It’s not the first time sale rumours have surfaced, with reports originally detailing Travelodge’s intentions back in April following a full-year profit increase of 63.5 per cent in 2014.

However, the owners of the budget hotel brand, Goldman Sachs, GoldenTree Asset Management and Avenue Capital, are said to have appointed Deutsche Bank as an adviser to manage a £1bn sale of the business or public listing, the Daily Telegraph reports.

“Boosted by our strong trading performance and the attractions of the value segment, major developers and financial institutions are showing their confidence in the future of new Travelodge,” said Peter Gowers, Travelodge chief executive.

Travelodge almost fell into administration in 2012 but was able to recover with assistance from its owners, which supplied funding to help the company refresh a number of its ageing hotels and reach its 30th anniversary this year.

At 92 per cent, the majority of rooms across the country have been modernised as part of a £100m programme to include a refreshed look and new beds, while brand recognition among consumers is at 90 per cent.

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The overhaul has resulted in the firm’s site attracting one million visits weekly and a booking made every three seconds, with its May-launched mobile app has received more than 85,000 downloads.

These changes have enabled Travelodge to experience a 17.9 per cent year-on-year revenue increase for the six months to 1 July, amounting to £261m. On an revenue per room basis, that’s £35.87 and up by 15.2 per cent and business customers were hailed as the main driver of the growth.

Meanwhile, occupancy for the period rose by 2.4 per cent to 74.4 per cent overhaul. Claiming that “costs remain tightly controlled” the company noted that EBITDA for the twelve months to 1 July 2015 was £90.1m.

Gowers added: “Customers are responding well to the upgraded quality levels driven by our £100m modernisation programme. Businesses are choosing Travelodge in ever larger numbers and families have welcomed the introduction of separate beds for children,”

“Our development momentum is beginning to accelerate. We opened five hotels in the first half of the year and we expect to open a further 45 over the next 24 months. We have already exchanged contracts for more new rooms in the first half of 2015 than we did in the whole of 2014.”

The total number of Travelodge rooms, which had an 11.4 per cent rate rise year-on-year to hit £48.19 in H1, sit at 38,665 and the new locations of hotels opened in 2015 include Wembley, Southampton, Egham, Winnersh and Llandudno in North Wales.

Given that Travelodge has been powered by business users this year, Wales could be a key future location for the company following the news that Seedrs has promised to help fuel enterprises in the region with crowdfunding support.