Travelodge has said it is confident in its offer for landlords and the opportunities of the UK budget hotel sector, but estimates the Covid-19 outbreak in the UK could hit sales for the year by £6m-£7m.
In the 2019 annual report for Thame and London, Travelodge's parent company, it reported total revenue of £727.9m, up 5%; and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £129.1m, up 5.8%. But chief executive Peter Gowers said in the report that current estimates suggest revenue in 2020 could be half that of 2019.
Travelodge underwent a Company Voluntary Arrangement (CVA) in June, which saw it agree temporary rent reductions with landlords of up to £140m through to the end of 2021. However, at least two platforms – AGO Hotels and Goodnight Hotels – have since been launched to tempt disgruntled landlords into exercising their break clause with Travelodge and rebrand. Travelodge said that, at the time, no break rights have yet been exercised for any hotel leases.
Gowers said: "The Covid-19 situation is an unprecedented short-term challenge and the wide variations in potential outcomes present material uncertainty. However, Travelodge consistently delivered high levels of quality, growth and cashflow prior to the onset of this situation, and we remain confident in the long-term prospects for the sector."
Chairman Brian Wallace's statement in the report said: "The Covid-19 situation clearly presents significant challenges for the hospitality industry, and while it is still too early to assess the full impact, we do expect it to continue through this year and likely at least into the next. However, we remain confident that the longer-term trends in domestic tourism and infrastructure investment can create significant opportunities for us as the situation begins to return to normal."
Founded in 1985, Travelodge is the second largest hotel brand in the UK, based on number of hotels and rooms operated. The group leases, franchises, manages and owns 591 hotels, mostly in the UK but also in Ireland and Spain. The company is owned by funds managed by GoldenTree Asset Management, Goldman Sachs Group and Avenue Capital Group.
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