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Travelodge is the UK’s oldest player in the fast-growing budget hotel sector and dates back to 1985. It is the second largest group in the limited-service market and the fourth largest hotel operator in the country.

It manages a chain of leased properties in city centres, airports and roadside locations. Most city centre hotels have a Bar Café and 115 roadside hotels are co-located with Little Chef restaurants.

The brand originated in the USA, where it is currently owned by the Cendant Corporation. In the UK, it has passed through the hands of Forte, Granada and Compass to its current owner, venture capital firm Permira, which acquired it with the Little Chef roadside restaurant chain. In October, Permira sold Little Chef to the Peoples Restaurant Group.

Travelodge has recently made its first move into Europe with openings in Spain.

Brands: Bar Cafe

Timeline

• 1939: The Travelodge name is introduced in the USA by businessman Scott King and the company is incorporated in 1946.
• 1973: Trusthouse Forte buys Travelodge International Inc, which was operating or franchising around 450 hotels and motels throughout America (the US business is subsequently offloaded to hotel franchisor Cendant).
• 1985: Alan Hearn (the cousin of Grant Hearn, Travelodge chief executive from 2003) launches the Travelodge brand in the UK with the opening of a 20-bedroom lodge on the A38 at Barton-under-Needwood in Staffordshire. The hotel is still operating today.
• 1996: Travelodge is bought by the Granada Group as part of its £3.87b hostile takeover of Trusthouse Forte.
• July 2000: Travelodge becomes part of contract caterer Compass following its £1b merger with the Granada Group. The enlarged company demerges into the Granada media and the Compass hospitality and foodservice businesses in February 2001.
• Feb 2003: Venture capital firm Permira buys the 220-strong Travelodge chain, along with 368 Little Chef roadside restaurants, from Compass for £712m.
• March 2004: Travelodge buys the Drury Lane Moat House in London for £11m.
• May 2004: The group sells its eight Irish properties, along with the brand franchise for Ireland, for €22.15m (£15m) to Smorgs, a company set up by former Jurys Doyle executives Seamus McGowan and Richard O’Sullivan. It also opens its first Spanish hotel at Las Rozas, followed by a property in Madrid in October.
• June 2004: Travelodge boosts its inner London hotel tally to five after buying two Thistle hotels in Kings Cross for £55m in a sales-and-leaseback deal with Kirkmore Securities.
• October 2004:  The group sells its entire freehold estate of 135 hotels for £400m to Prestbury Hotels in a sale-and-leaseback deal based around 25 to 35-year leases. The proceeds are to fund expansion and pay off debt.
• March 2005: Permira puts 118 standalone Little Chefs on the market for a rumoured £45m-£50m. The plan at this stage is to keep 115 Little Chefs that share locations with the hotels. However, in October, Permira sells the entire estate of 233 Little Chefs to the Peoples Restaurant Group for more than £52m.
• November 2005: Travelodge declares war on rival Premier Travel Inn with the news that, throughout 2006, it will offer 100,000 rooms for just £10 per night, and another 500,000 for just £26. The group has cut £3m of costs from its head office to fund the £20m-worth of price cuts.

Operating data

Number of UK hotels: 269

Number of UK bedrooms: 15,000

Number of employees: around 4,500

More than six million people stay at a Travelodge every year

In 2004, 45% of bookings were made online. The group aims to boost this to 65% in 2005.

Strategy

“The business is focused on building its UK market by opening 15,000 rooms over the next six years, with 2,500 opening in 2005. The budget hotel sector is the fastest-growing part of the UK hotel business with the highest returns and this sector is expected to grow to 100,000 rooms by 2010.”

Source: company press release, March 2005

Chief executive

Grant Hearn

Key directors

Chairman: Keith Hamill
Chief financial officer: Jon Mortimore
Chief operating officer: Harry Turner
Sales and marketing director: Guy Parsons
Human resources director: Geraldine Mills
Commercial director: Peter Halsley
Development director: Ben Roberts
Director of sleep: Wayne Munnelly

Contact

Oxford House
Oxford Road
Thame
Oxon
OX9 2AH

Tel: 0121 521 6000
Fax: 0121 521 6881

E-mail:
Website: http://www.travelodge.co.uk

Commentary

Travelodge may be the UK’s first budget brand but it has not been resting on its laurels. It unveiled a new brand identity in March 2005 following a £20m refurbishment of its bedrooms over the previous two years. It plans to spend a further £20m in the next two years rolling out the brand.

It has also been quick to identify new opportunities. In 2003 it piloted a scheme to combat driver fatigue by renting out rooms by the half-hour which is now offered each winter at all roadside hotels. In March 2004 it became the first budget hotel group in the UK to adopt the time-sensitive booking system – where early birds get lower rates – used by airlines.

The group passed up its chance to become the UK’s biggest budget group in 2003 when it pulled out of the race to buy 141 Premier Lodge hotels from the Spirit Group. They went to Whitbread’s Travel Inn (now called Premier Travel Inn) which leads the market.

Instead, it is pursuing an aggressive expansion plan to double its bedroom tally over the next six years by adding 15,000 new rooms to the estate. This will include 6,000 new bedrooms by 2006, of which 3,500 will be located within Central London.

Its venture into the European market will continue, with a third hotel set to open in Spain later this year.