Commonwealth Games drives Travelodge’s £75m Scottish Expansion

Posted on 14 July, 2014 by Cliff Goodwin

Britain’s third biggest hotel chain is hoping to benefit from Scotland’s tourism boom by building ten new hotels north of the border. The £75m expansion is being backed by international hedge fund investment.

Commonwealth-Games-drives-Travelodges-75m-Scottish-Expansion

Travelodge — which already has nearly 38,000 budget hotel rooms across Britain — believes that by 2030 the low-cost providers will account for almost a quarter of the UK’s hotel sector, with a similar level of growth expected in Scotland.

And with its 2012 profits crisis now firmly behind it, Travelodge feels it’s strong enough to go head to head with its biggest rival Premier Inn, which has just opened a new hotel in Edinburgh and announced plans to add another 20,000 rooms to its UK operation by 2018.

Travelodge’s newfound confidence is driven, almost exclusively, by its American owners who are already spending around £1m a week in a rolling refurbishment of room decor upgrades and brighter furnishings. Goldman Sachs and US hedge funds Golden Tree Asset and Avenue Capital Group took over the hospitality company two years ago, immediately trimming its 500-plus sites by nearly 10 per cent and restructuring its finances to reduce Travelodge’s debt by half.

Chief executive Peter Gowers feels, however, that his company is well represented in the Scottish capital and is concentrating instead on Glasgow, where it is already building a 171-room hotel due to open before the year end. It also plans on opening a smaller site in Scotland’s largest city to cash in one the wave of interest created by the Commonwealth Games.

“There is an interesting parallel with Manchester, which has really gone through a resurgence since hosting the games in 2002, and which really put the city on the tourism map,” he said. “We are hoping that it will happen in Glasgow as well.”

Travelodge has also identified potential sites in Oban, Peterhead and St Andrews, where it wants to build 120-bed establishments. At present the chain has just 40 hotels in Scotland, a slight under-representation in Travelodge’s national portfolio.

Overall the latest expansion plan will add about 900 rooms to the 2,700 it already has in Scotland. It also wants to expand its presence in Aberdeen and set up in other towns, including Falkirk, Hamilton and Motherwell. Gowers hoped the investment will create at least 200 jobs and boost the Scottish economy by £16m a year.

“Throughout the last five or six years, people’s desire to go on holiday or take a break has not diminished in the slightest, but they are perhaps having to be more conscious of cost,” added the executive. “I think there is a big opportunity in Scotland generally where the value hotel market is only about 14 per cent, compared to 18 per cent in England and more than 30 per cent in the United States.

“Scotland’s tourism policy is targeting visitors from the British Isles, which is our target market. So there are a lot of people being encouraged to come to Scotland which, at present, has  a low proportion of budget hotels,” he added.




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