The British budget hotel company has a plan for growth in Spain that will create hundreds of jobs

Travelodge was the pioneer of budget hotels in the UK back in 1985. Over nearly four decades, it has grown from strength to strength and is now an iconic British brand and one of the largest hotel chains in the UK. It currently manages almost 600 hotels with over 46,000 rooms in the UK, Ireland and Spain. They employ more than 12,000 people and accommodate 21 million travellers each year.

 

The company brought its formula to Spain in the first decade of the 2000s, and now has six establishments. After a period of slow growth, it is now announcing an ambitious plan to grow in twenty cities, following a report commissioned by the consultancy Christie & Co.

 

 

Why did you choose Spain to begin your leap to the European continent?

In 2004, Travelodge was the first British budget hotel brand to be launched in Spain when we opened our first hotel in Madrid, closely followed by our first in Barcelona. In the following years, we opened three more hotels in Barcelona, Madrid and the first one in Valencia. In October of this year, we opened our sixth hotel in Spain: Travelodge Madrid Coslada Airport. Spain is an established tourism market and is fast becoming an important business centre and a key conference destination. It is the second-most visited country in Europe. In 2022, it recorded over 100 million international visitors, and this figure will only increase in the future. We are therefore very excited about the growth opportunities in Spain and what we can offer potential investors. This is a fantastic country, and we look forward to growing our hotel network, creating jobs and offering more choice and great value to business and leisure travellers.

 

What characterises your hotel offering?

Our aim is to make travel affordable for everyone. 80% of our hotels are located in major cities, towns and holiday resorts, near attractions, airports and conference centres. By 2022, we will welcome more than 21 million business and leisure guests to our hotels. More than 200,000 of these guests visited our hotels in Spain, where all our hotels have a four-star rating or higher on TripAdvisor. We operate in the resilient mid-market segment of the hotel market and have a strong track record of outperforming this segment during each of the last eight years. All our Spanish hotels are an ideal base for both business and leisure guests visiting Spain, as we offer a wide range of room types, an extensive breakfast, lunch and dinner menu and a 24-hour snack bar at affordable prices, as well as Wi-Fi for all guests. All our hotels are pet-friendly.

 

Why is there so little supply in your segment in Spain?

For many years, the Spanish hotel market has been dominated by independent hotel owners and franchise operators, as well as management agreements and shorter lease operators. However, we are seeing that investors are increasingly looking for long-term, stable sources of income to support Spain's growing tourism industry. We have a strong platform for growing our business in Spain, and have worked closely with Christie & Co, Europe's leading property consultancy, who have produced a strategic expansion report to help us grow our business in Spain. The results of this report confirm that, despite Spain being one of the most visited countries in the world and one of the fastest growing hotel markets worldwide, it remains an under-represented market for budget accommodation, with budget and mid-range hotel rooms representing only 33% of total room supply, well below markets like the UK, France and the US, and only a small proportion of these are branded. The report forecasts that the economy and mid-market segment of the Spanish hotel market could grow by 15,000 branded rooms over the next five years, through a combination of new developments and conversions of existing hotels.

 

According to the report, how will this market grow?

Hotel demand in Spain is heavily weighted towards the leisure segment, which is geared towards international demand, and towards the mid-range and budget hotel market, where demand is growing at a faster rate than supply. There is also an evident lack of branded hotels.

 

What is Travelodge's expansion plan in Spain?

We have identified the twenty fastest growing locations in Spain, areas where good quality, affordable branded accommodation is currently in short supply. Our list of hotel development targets stretches across Spain, and these target locations represent a multi-million euro investment opportunity, which would also create hundreds of new jobs and boost local economies. These include Barcelona, Madrid, Valencia, Alicante, Bilbao, Cadiz, Malaga, Palma de Mallorca, San Sebastian, Seville, Benidorm, Cordoba, Gerona, Granada, Las Palmas de Gran Canaria, Santiago de Compostela, Santander, Tarragona, Valladolid and Zaragoza.

 

There was already a first expansion plan that was cut short by the 2007 crisis. How important is Spain for the company’s strategy?

We have always had growth plans for Spain and, of the six hotels we operate, four have opened since then (Valencia Airport in 2011, Madrid Alcalá and Barcelona Poblenou in 2013 and Madrid Coslada this year). At the same time, our portfolio has grown significantly in the UK. Due to the commercial success of our six Spanish hotels, the excellent team we have here and the demand for quality and good value accommodation, our brand fits perfectly into the obvious gap in the Spanish market.

 

You manage your hotels on a long-term leasing model, without owning the property. What investment is involved in setting up an establishment like the one at Coslada Airport?

Our proven and successful long-term leasing model can offer investors and lessors a long-term income alternative in Spain. We have the know-how and experience to build new hotels, convert existing offices and commercial premises into hotels and, of course, transform existing hotels to suit our brand, as we have done in Spain. Fundamentally, Travelodge is committed to the long term and establishes long-term partnerships with landlords. We are confident that we can offer a longer mandatory lease term than other operators in Spain, which creates greater investment value for our owners and a longer-lasting economic commitment to the areas in which we operate. In terms of investment in creating a new hotel, each opening will be different. For example, at our most recent hotel in Madrid, we have invested over one million euros in updating the interiors with our new premium design, implementing the best of the Travelodge format but retaining some of the building’s existing high-quality elements. We are delighted that all performance indicators have advanced significantly since our acquisition and refurbishment of the hotel.

 

How many employees do you have in Spain and how will this figure evolve?

As of 2023, we have over 93 direct employees and between 50 and 60 indirect employees. This figure will grow as we open more hotels across the country, and wherever we can we will employ locally. Our proposed expansion plan could create hundreds of new jobs across Spain.

 

Of the twenty cities you mentioned, do you intend to reach all of them?

We have a lot of work ahead of us, but we are confident that Travelodge can offer investors a unique opportunity to maximise the investment value of their properties and offer terms that will enable successful new developments. We are supported by our UK real estate and development team, who are working closely with Aldaba Partners, actively evaluating projects and exploring opportunities across Spain.

 

Photos: Travelodge