Customers are likely to trade down to budget hotels from other segments as pressure mounts on household spending, according to Travelodge.
The projection came as the low cost hotel group reported record financial results, surpassing pre-pandemic 2019 levels by the end of the third quarter.
Adjusted earnings [ebitda] of £164.4 million were reported against £102.2 million in 2019 and £43.7 million in 2021. Total underlying revenue rose by 22.7% to £669.9 million.
The portfolio was expanded to reach 595 hotels with five new additions.
The company said: “Whilst the current political and macro-economic environment creates an uncertain backdrop, the budget hotel segment has proven resilience and we expect to benefit from attractive demand drivers.”
Chief executive Jo Boydell cited customers returning to both leisure and business travel for the record set of financial results.
“Our purpose is to provide affordable travel for everyone and amid the growing cost of living pressures, we have seen that more customers are choosing to stay with us,” she said.
“We have continued to outperform against the competitive segment, for the eighth consecutive year, and it’s particularly pleasing to see these trends continue in the first weeks of the fourth quarter.
“Our cash position remains strong, and we have continued to invest in the business whilst also further de-leveraging, with the term loan repaid in full on 26 October.
“We were also pleased that on 17 November Moody’s upgraded our credit rating from Caa1 to B3, reflecting the businesses strong performance.
“Looking ahead, we are very mindful of the cost of living crisis and are doing all we can to navigate the cost pressures on our business.
“The near-term trading signs are positive, but booking patterns remain short-lead and we therefore have limited visibility.
“However, the budget end of the hotel segment is the most resilient, with budget brands historically performing strongest in tough economic times.”