Travelodge unveils £70m expansion plan

Budget hotel chain Travelodge continued its expansion today by announcing the addition of seven new sites to its portfolio in a £70m (€88.4m) investment.

The move, which will add 669 rooms through the acquisition of two Swallow hotels and conversion of five other hotels, comes as firms such as Travelodge and Premier Inn look to cash in on growing demand for cheaper accommodation.

Travelodge said it will spend £7m (€8.4m) converting the Swallow hotels in Scarborough and Edinburgh, while committing £34.5m (€43.6m) to other hotels at London’s Finsbury Park, Porthmadog, Gloucester, Caernarfon and Egham.

Travelodge operates 330 hotels and 22,500 rooms, but plans to grow this to around 1,000 hotels and 70,000 rooms by 2020. It expects the Swallow hotels to be trading under the Travelodge brand early next year.

The chain, which employs 5,000 staff, is owned by Dubai International Capital following the sale of the business by private equity firm Permira in 2006.

Travelodge’s property director, Paul Harvey, said the business hoped to open a further 4,000 new rooms in 2009. He said the economic downturn made the task easier as more former office blocks became available for conversion to hotels.

He added: “As price and location continue to drive consumer behaviour, we are seeing customers shift to budget hotel accommodation.”

The trend for executives to trade down to cheaper hotel rooms has also been highlighted by Whitbread-owned Premier Inn, which last week reported double-digit sales growth in the 13 weeks to May 29, up 10.7% on a like-for-like basis.

Whitbread’s hotel division accounts for almost half of group revenues and is set to grow by another 50% to 55,000 rooms in the next five years.

The leisure group held talks over a potential £3bn (€3.8bn) merger with rival Travelodge earlier this year.