The estimated £1 billion auction of Travelodge has been put on ice.
Chief executive, Peter Gowers, said that while there were “still people talking”, there was “no formal sale process” for the UK’s second largest budget hotel chain and nothing was likely to happen this year.
“We conducted a strategic review before Christmas, but with trading going as it is our owners are now perfectly comfortable holding on,” he told The Times.
The owners — Goldman Sachs, Avenue Capital and GoldenTree Asset Management — put the chain of 519 hotels up for sale through Deutsche Bank a few months ago, three years after rescuing it from disaster in a debt restructuring.
The frontrunners to buy the chain — US investment firms Starwood Capital and Apollo Global Management — are thought to have submitted final offers for the leasehold business that fell short of expectations.
Both had also expressed an interested in buying a separate £600 million property portfolio of 144 Travelodge assets.
Travelodge, which runs second to Whitbread’s Premier Inn, will today issue a trading update forecasting that underlying earnings passed £100 million for the first time last year, up from £66 million previously and £40.5 million in 2013, on a record 18 million customers.
Turnover increased by 13% to £558 million as revenue per available room rose by 11.7% to £38.44.
Occupancy rose from 75.6% to 76.6%, while the average room rate was up 10.2% at £50.19.
Gowers said the company benefited from a £100 million investment, which was completed in December and which helped boost the average TripAdvisor score for its hotels from 2.5 out of five — “that was bad” — to four out of five.
“We’re raising the quality level, though we’re not trying to be fancy,” he said. “We know who we are. I’m a great believer that businesses have to be true to their fundamental character.”
Business travellers accounted for about half of rooms sold, up from about a third in 2013, a further sign that budget had become mainstream, Gowers added.
“The budget brands just march on in Britain, whether it’s airlines, retailers or hotels,” he said.
Gowers, who took the reins in 2013, said bookings had also been boosted by its £21 million That’s Travelodgical advertising campaign, featuring a collection of puppets.
The chain announced this month that spending on the campaign would be increased to £26 million this year.
The company added 12 hotels last year, up from only five in 2014, and will open 19 this year with plans to move up to 25-30 openings a year thereafter.
“We’ve identified 250 further potential locations in the UK,” Gowers said.