Travelodge revenues and profits hit by ‘tough market conditions’ in Q1

Travelodge has reported a drop in revenues from £205.5m to £198.4m, and a group EBITDA loss of £8.4m, down from profits of £4.9m in 2024, for the first quarter ended 31 March 2025, as its trading was hit by “tough market conditions”.

The group stated that its sales were supported by a diverse range of business and leisure customers and occupancy levels ahead of the market, but were impacted by softer UK market rates, particularly in Greater London,

Similarly, it said industry-wide inflationary cost pressures and weaker UK market conditions were partially offset by new hotels and strong cost control and efficiency measures impacted the company’s profits.

On a positive note, it revealed its Food and Beverage performance improved 3% compared with Q1 2024, driven by 85 Bar Café upgrades and menu enhancements. It also continued investments in growth and quality including its hotel refit programme, which saw 60% of its room estate upgraded.

Additionally, Travelodge has made strong strategic progress on UK and Spain development plans, with 14 UK hotels exchanged or completed in the year-to-date across a range of freehold and leasehold hotels; growing pipeline of opportunities in Spain. 

Its leisure bookings in the quarter were also boosted by events such as Cheltenham Festival, The Six Nations Rugby and Crufts, while business travel demand benefitted from face-to-face networking at events like IFE (the International Food and Drink Event), the UK’s largest food and drink industry event.

Its Q2 to-date, market RevPAR has continued below 2024 levels, with the weakest performance continuing to be in London due to softer rates, fewer events and reduced corporate demand. 

Travelodge has performed slightly below the MSE competitive segment in Q2, adjusting for rooms temporarily unavailable due to refurbishment at a London hotel. However, it added that booked revenue for H2 is ahead of 2024, supported by a “robust” events programme, improving construction demand and increases in consumer spending. 

The group also warned that with the increase in National Living Wage by a further 6.7%, combined with the impact of the Q1 NLW increase will result in a cost increase of £12m for the year.  

The rise in employer National Insurance contributions and reduction in the threshold for National Insurance from April 2025 are also expected to increase costs by £9m in 2025. 

Jo Boydell, Travelodge CEO, said: “Travelodge has made good strategic progress in the first quarter, with our investments in growth and quality driving good occupancy levels ahead of the market. 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.

“We remain focused on driving growth, quality and efficiencies through strategic investments, including our hotel refit programme which has now seen c.60% of our room estate upgraded, continuing to deliver both commercial and customer benefits. 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. This is alongside a growing pipeline in Spain, where our expanded portfolio is performing strongly.”

He added: “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. 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.”