LONDON — United Kingdom travelers are not prepared to cut back on entertainment and experiences due to inflation and cost-of-living crises, but they are being more judicious in their choice of hotel stays, according to Martin Robinson, executive chairman at the U.K. budget hotel brand Travelodge Hotels since April 2021.

He said headline entertainment acts such as Ed Sheeran and Coldplay are significant drivers of occupancy at his brand's hotels. Guests are willing to car pool to reach these shows and, before and afterward, share accommodation.

Robinson, who also is chairman at Parkdean Resorts, a holiday-home firm, and sits on the board of Disneyland Paris, said he believes budget and luxury hotels are “best suited to have a good 2023.”

For 17 years, Robinson was CEO of holiday-park accommodations firm Center Parcs’ European business and chairman of its U.K. division.

“People are spending money, the money they have saved, but in a different way,” he said.

Robinson said consumer spending habits are changing in other industries, too.

“They fly Ryanair and EasyJet and they drive Daihatsu. That is, they are buying the basics,” he said.

He pointed to $200 billion of consumer cash that he said did not exist before the pandemic and added “there are 8 million homes in the U.K. with no mortgage attached to them.”

Such mega-events as music’s Glastonbury Festival, canceled in 2020 and 2021 as the result of the pandemic, and a full calendar of sporting events have helped fuel domestic tourism and Travelodge’s bottom line in 2022, he said.

“We saw more profit by the end of August 2022 than we did in all of 2019. It is 50% leisure, 50% business travel, which includes dozens of different categories of user, all leveled out with dynamic pricing, with two or three different prices per day,” he said.

“[2022] has been a good year for White Van Man, but bad for government business, and we are the biggest provider of hotel rooms for government,” he added.

Occupancy at Travelodge hotels has also been lifted by company return-to-office policies.

“Some employees moved far out from London, and now there is back to office, they are staying at a Travelodge hotel for two or three nights per week,” Robinson said.

“We’re also seeing staff driving down to one of our hotels on a Thursday to arrive at 10 a.m. and then working here, bringing their family and taking a long weekend,” he said.

“Many [hotel firms] had a record year in 2022, and I think we will be near to that in 2023,” he said.

Goldman Sachs, GoldenTree Asset Management and Avenue Capital Group have owned Travelodge for more years than private-equity companies usually own hotel firms and brands, Robinson said.

“We have great owners, but yes, they want to exit. Ten years is a long time, but I keep explaining to them that there are no deals in the U.K. It’s not my fault. They expected an exit some six months ago,” he said.

Robinson said he the window for U.K. hotel deals is becoming narrower.

“That makes it difficult to keep management on the front foot for when anything might happen,” he said.

Robinson said the media, “especially the BBC,” has been overly pessimistic about the economy and customer demand, and this has a ripple-down effect on consumer demand and spending.

“The world will not crash down in 2023. … We’ve been served in the U.K. a cocktail of bad news. Monkeypox is the new COVID-19, for example. Yes, there are problems, but there are things we can do to mitigate many of these challenges,” he said.

Labor, construction and business rates top Robinson’s concerns.

“There have been delays to the pipeline, with construction companies folding, but we plan on being back to opening 25 hotels per year.

“We recovered quickly from COVID-19, so why should we not do the same from this slump? We should have more positivity,” he said, adding the firm currently has approximately 600 properties in operation and a further 300 in the pipeline.

Some of Robinson’s solutions or best practices, he said, are to recruit sensibly and treat staff well, as you would your customers; be flexible with employment models and schedules.

He said the government also must sort out business rates, which have been suspended for the moment but will come back.

Identity Service Provider checks, the government-mandated process for permitting non-British employees the right to work in the U.K., also are a bind, Robinson said.

“These checks take 12 weeks, a lengthy time span in which you run the risk of losing potential employees,” he said.

Approximately 35% of Travelodge hotels have attached restaurants, and Robinson said finding staff for them is a particular challenge, as is not pushing up menu prices in relation to inflation.

“We have seen 20%, 30%, 40% increases in [food and beverage] costs, and we have not been able to push more than 5% or 6% on as a price increase. We’re going to have to push on to customers these cost increases in the longer term,” he said.

Robinson said average daily rate can be raised if Travelodge's chief U.K. competitor does the same.

“We’re number two to Premier Inn, but we benefit from its presence and size. Our disadvantage is that we have a leaseholder model, but when they raise their rates, we are permitted to do likewise.

“The U.K. is unusual in that it has two large economy brands dominating the market,” he added.

There has been a lot of change at the highest ranks of Travelodge in the past 18 months, with Craig Bonnar being appointed CEO in May 2021, one month after Robinson started in his role. One year later, Bonnar stepped down and Jo Boydell took over the role of CEO, promoted from her chief financial officer role she started in March 2013.

The chief operating officer position since June 2021 has been filled by Claire Good, previously the firm’s director of central operations.

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