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Travelodge has issued a cost guidance for 2026, forecasting gross cost inflation of between 6% and 7.5% due to higher business rates and rising employment costs, despite reporting a 0.7% increase in group revenues to £1.04bn for the year ended 31 December 2025.
The budget hotel group also saw fourth quarter revenues rise 4.3% to £261m due to demand from major leisure events, including the World Travel Market, autumn rugby internationals and New Year’s Eve celebrations.
During 2025, the group opened 21 new hotels across the UK, its largest development programme in more than a decade. The firm also expanded its pipeline in Spain.
Food and beverage sales likewise grew following the rollout of the 85 Bar Cafe concept. However, revenue per available room fell 1.9% to £57 for the full year.
The group maintained a solid liquidity position with cash balances of £131m at year-end, despite ongoing investments in room refits and technology.
According to Travelodge’s management team, business rates are projected to increase from £38m in 2025 to £50m, while wage costs are forecast to rise by approximately £9m, for 2026.
The group plans capital expenditure of around £100m for 2026, with nearly half allocated to discretionary refit investments and new hotel development.
Jo Boydell, chief executive of Travelodge, said: “In the near term, it is clear that the cumulative impact of recent government policies has made the operating environment more challenging: higher business rates, rising employment costs and new regulatory requirements are direct headwinds to the health of the sector.
“By focusing immediate business rates support solely on pubs, the government is neglecting the broader hospitality sector and undermining its own goals for growth and job creation.”
