Travelodge hails ‘record’ FY results and completes lease re-gear
As part of the LXI lease re-gear, Travelodge has negotiated new caps and collars on rent reviews to limit rental increases during high inflation periods
Travelodge has delivered record financial results in 2022, “significantly” ahead of its previous best year in 2019, whilst also confirming the completion of a lease re-gear with its largest landlord, LXI REIT.
Total underlying revenues in 2022 were up 25% on 2019 levels while EBITDA is expected to be between £210m and £215m, up from £129.1m in 2019 and £81.8m in 2021.
Meanwhile, UK like-for-like RevPAR growth outperformed the Smith Travel Research (STR) MSE benchmark competitive segment, marking the eight consecutive year of Travelodge outperformance.
The group said its performance reflected the resilience of the UK budget hotel market and was driven by strong levels of domestic leisure demand, a rapid recovery in ‘blue collar’ business demand, with a more gradual recovery in ‘white collar’ corporate demand.
At the same time, the hotel group completed a mutually beneficial lease re-gear with its largest landlord, LXI REIT for 97 of the properties in the 122-strong hotel portfolio it acquired as part of Secure Income REIT merger in 2022.
As part of the LXI lease re-gear, Travelodge has negotiated new caps and collars on rent reviews to limit rental increases during high inflation periods and lease extensions averaging nine years for all 122 hotels.
Previously, the rent increases were based on uncapped RPI, but have now been converted to CPI+0.5% with a cap (maximum uplift) of 4% and a collar (minimum uplift) of 1%.
The re-gear also includes rent smoothing across the portfolio, resetting rent levels for the 122 hotels to reflect the trading performance of each site. The total rent across the hotels will remain the same, but has been smoothed on a site by site basis.
Jo Boydell, Travelodge CEO, said: “We are delighted to announce record results for 2022, with our eighth consecutive year of RevPAR growth outperformance against our competitive segment and EBITDA significantly ahead of 2019 levels. Strong trading has continued into the first few weeks of 2023 with leisure and ‘blue collar’ customers continuing to prioritise travel and seek out value in tough economic times.
“We are also very pleased to confirm the completion of a mutually beneficial lease re-gear with our largest landlord, LXI REIT, which caps future rent increases and includes green lease clauses to support our sustainability plan ‘Better Future’.”
In addition, the group confirmed that administrators have issued their final report, confirming the CVA has now been fully implemented and is now formally at an end.
Based on the expected EBITDA range above, the group now expects to make a one-off payment under the excess cumulative EBITDA landlord rent payment clause shortly after it publishes its 2022 audited annual report and accounts.
