From basket case to billion pound business, Travelodge has undergone a remarkable turnaround in just three short years. The chain was on the brink of collapse with a debt mountain of £635 million in 2012. But last week its owners – led by Goldman Sachs – put the chain up for sale with an expected £1 billion price tag.
Small wonder that chief executive Peter Gowers, who has led the turnaround, looks cheerful as he lounges in one of the rooms at the London Waterloo Travelodge hotel. It took a £100 million programme, but Travelodge recorded sales of £497 million last year, with underlying profits jumping 63.5 per cent to £66.2 million and sales are continuing to grow this year.
‘It was a huge opportunity to turn round a fantastic brand that had been through some challenging times,’ says Gowers, who joined Travelodge at the end of 2013 from self-storage company Safestore.
While Travelodge would never claim to be the height of luxury, Gowers has managed to tap the market that wants unfussy, convenient accommodation at a bargain price.
‘We have very big corporations [as customers] like BT, Vodafone. The Government is our single largest customer – it wants to get good value for our taxes.’
But Gowers, who used to run InterContinental Hotels Group’s Asia business, believes the essential simplicity and value of the hotel is its strength as long as the basic product is kept slick and modern.
‘Travelodge was a very well-run trading business but through a succession of owners it wasn’t able to invest in its core product and when that happens, things get very difficult. With £100 million in the business, the performance has been dramatically improved.’
On top of the £100 million, a further £25 million was spent on the new ‘Travelodgical’ advertising campaign with its singing puppets – ‘the ads have been fantastically successful for us’ he says – while the rest was spent on refurbishing its 522 hotels, buying artwork, 38,000 new beds and painting a ‘blue signature wall’ behind every headboard. According to behavioural psychologists consulted by Travelodge, the blue wall makes people feel relaxed. Continue reading ‘My £125 million Travelodge transformation’ – Travelodge ceo Peter Gowers talks prices, kettles, beds and rugby