Hotel market budget

The budget hotel market in the UK has become a very competitive sector. There is increasing pressure on commercial space, and planning restrictions can often scupper the best-laid plans.

Travelodge, which is owned by the Compass Group, is one of the most established brands in the budget hotel industry. Its outlets can be found on major motorways across the country and in most cities and towns, and the chain was awarded Most Improved Brand of the Year in the British Hotel Guest Survey 2000. But the company has had to work hard to maintain its position at the top.

“As little as five years ago there were just two principal players in the business: Whitbread and Travelodge with a 90 per cent share of the market,” says Compass UK’s roadside division’s property director Kevin Jackson.

“Now there are lots of other competitors trying to establish themselves in the market. Although our market share has now dropped, we are still well ahead of the others.” At present Travelodge runs 220 hotels across the length and breadth of the country.

The brand benefits from substantial financial resources. Compass Group UK’s roadside division, which includes Moto, Harry Ramsden’s, Little Chef and of course Travelodge, has a combined turnover of more than £1 billion, with profits of over £150 million.

UK Boutique Hotels by the sea – UK Boutique Hotels by the sea

And with an annual development budget of around £100 million, it is clear that Compass intends to continue to grow the business.

“We aim to expand our Travelodge operations by around 1,500 rooms a year,” says Jackson. “This is the equivalent of opening between 20 and 25 new Travelodges.”

The company remains as enthusiastic as ever about developing the brand, and Jackson makes it clear that the expansion programme has been largely unaffected by recent developments. “There has been no pressure to slow down, either from the skills shortage crisis or the foot and mouth epidemic last year.”

Ever increasing competition for sites is one reason why Jackson feels compelled to pursue a vigorous expansion programme. “We are making a conscious effort to keep going,” he says. “It is true, there will come a time when the market reaches saturation point, but we hope to have occupied all the best sites by then.”

A relatively new strategy has been the establishment of Travelodge outlets away from roadsides, and the brand is now represented in all the major UK cities. “This has been an unqualified success,” says Jackson.