The largest Travelodge hotel will form part of the budget chain’s next wave of expansion.

Construction has started on the 395-room flagship hotel in London, which is due to open next year close to the iconic Gherkin building.

The project was announced alongside substantial growth plans for this year when 15 hotels will be opened across the country, including five in the capital and at major shopping centres including Lakeside at Thurrock in Essex.

The openings will create 325 jobs and take the number of Travelodge sites up to 558 in total across the UK, Spain and Ireland.

Chief executive Peter Gowers said the company had recently sought to better target the business community as well as the growing trend for leisure customers to combine shopping with an overnight stay in a nearby hotel, something the new locations would build on.

A total of 10 of the new openings will also include a bar/restaurant, bringing the number of locations with on-site dining to 174.

Gowers described the low-cost segment of the hotel industry as the “fastest growing in the UK and globally”.

“And we still think there is a long way to go,” he told the Daily Telegraph.

“Just one in five UK hotel rooms are in branded budget hotels, whereas it is one in three in the US. It’s only one in seven in London so clearly there is a lot further to go.”

Gowers acknowledged the pressures on businesses such as his from rising costs – with Travelodge’s business rates rising by 10% or £3.3 million due to the recent revaluation – as well as the national living wage.

But he said the company paid the national living wage to employees below the age of 25, above which the rate becomes a legal requirement.

Gowers said this was an indication of how cash generative the business was, something which should help the company hit its aim of building 20 hotels on average over the next three years.

Another 250 sites have been identified for potential hotels, with London likely to be a key location given he claimed average hotel prices were almost twice the level of the UK regions.

“Customers are crying out for more good quality, low-cost places to stay,” Gowers added.