Travelodge has reported a loss for the first quarter of its financial year, as it grapples with tax increases announced by Chancellor Rachel Reeves in her Autumn Budget, which are set to cost the hotel chain over £20m this year.
The firm confirmed last year that the rise in the National Living Wage will result in an additional expenditure of around £12m, while the hike in employers' National Insurance contributions and a reduction in the threshold will add a further £9m to its tax bill in 2025, as reported by .
Travelodge also cautioned that it anticipates further cost increases throughout the year due to inflation-linked rent reviews.
The hotel chain's revenue for the first quarter, ending March, dipped from £205.5m to £198.4m.
The company attributed this decline to "softer Ƶ market trading conditions, particularly in Greater London, where weaker rates and reduced demand impacted RevPAR [Revenue Per Available Room]"
Travelodge disclosed an EBITDA [earnings before interest, taxes, depreciation and amortisation] loss of £8.4m for the quarter, a significant drop from a profit of £4.9m during the same period in 2024.
The company has not released any additional profit/loss figures.
Regarding its second quarter, Travelodge stated that its market RevPAR continues to lag behind 2024 levels, "with the weakest performance continuing to be in London due to softer rates, fewer events and reduced corporate demand".
Travelodge hoping for Oasis, Beyoncé and Bruce Springsteen boost
Travelodge's chief executive, Jo Boydell, has reported that the company has seen strategic advancements in the first quarter, attributing this to investments in growth and quality which have led to occupancy levels surpassing market expectations.
Boydell noted: "However, our performance in the traditionally most quiet quarter reflects challenging external market conditions, particularly in Greater London, where softer rates and reduced business travel impacted trading."
She emphasised the company's commitment to expansion and improvement, stating: "We remain focused on driving growth, quality and efficiencies through strategic investments, including our hotel refit programme which has now seen c.60 per cent of our room estate upgraded, continuing to deliver both commercial and customer benefits."
The CEO also highlighted Travelodge's development achievements: "We are also making excellent progress with our development plans, with 11 hotels open to date and a further four hotels exchanged or completed across a range of freehold and leasehold models."
Boydell added that the company's Spanish operations are showing promising results: "This is alongside a growing pipeline in Spain, where our expanded portfolio is performing strongly."
Looking to the future, Boydell remains optimistic despite economic headwinds: "Looking ahead, despite macroeconomic uncertainty, we are encouraged by H2 forward bookings, a robust summer events programme featuring major stadium concerts like Oasis, Beyoncé and Bruce Springsteen, and early positive signs of returning business travel demand, particularly from the construction sector."
Travelodge has expressed confidence in its strategic direction, underpinned by a robust liquidity position, efficient operations, and a well-maintained hotel portfolio, stating: "With a clear strategy supported by a strong liquidity position, efficient operating model and well-invested hotel network, we are well-positioned for the future and excited about the growth opportunities ahead of us."
Looking forward, Travelodge acknowledges the mix of potential upsides and hurdles, noting: "sees both opportunities and challenges in the months ahead" despite an unpredictable macroeconomic and political climate.
The company is buoyed by encouraging indicators for the latter half of 2025, including advanced bookings outpacing those of 2024, a solid events calendar, and a rebound in construction-related demand.
Emphasising its strengths, Travelodge added: "With a strong brand, efficient operating model and well-invested hotel network, the business is well-positioned for future growth and remains confident in the medium-term prospects for the budget hotel sector."
