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The group is facing higher staff bills, property taxes and a hit from the new tourist tax.
Holly WilliamsThursday 27 November 2025 09:29 GMT
open image in galleryBudget hotel chain Travelodge has warned it is facing a barrage of rising costs from wage bill hikes and Budget tax moves as it also flagged worries over consumer demand. (PA Archive)
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Budget hotel chain Travelodge has warned it is facing a barrage of rising costs from wage bill hikes and Budget tax moves as it also flagged worries over consumer demand.
The group said the upcoming above-inflation rise in the minimum wage announced this week, together with the recent rise in national insurance contributions, will see staff costs rise by about another £11 million in 2026.
Added to this, it warned that business rates changes – including the Chancellor’s Budget move to impose a new “surtax” on larger commercial properties worth £500,000 or more – will see its property tax costs “significantly increase”, while the new Employment Rights Bill will heap on further expenses.
It also hit out at the tourist tax announcement this week, which will see mayors given the power to impose a charge on visitors staying in hotels, bed and breakfasts, guest houses and holiday lets.
Jo Boydell, chief executive of Travelodge, said: “Into 2026, we expect further cost pressures from the 2026 increase in the national living wage, the Employment Rights Bill, the business rates revaluation due in April 2026 and the introduction of new visitor levies, though the impact remains difficult to quantify at this stage.
“We remain focused on strong cost control and technology-driven efficiencies to help mitigate these pressures as far as possible.”
The new tourist tax comes on top of existing visitor levies across England, where a charge is applied to overnight stays in hotels and other similar accommodation, with Scotland and Wales also developing their own visitor levy regimes.
Travelodge said: “The potential impact of the visitor levies is unclear as there is little consistency currently, with no centralised framework in existence, meaning that decision to charge a visitor levy and the associated rate is set locally with a lack of transparency.
“The Government’s plan to empower English mayors to implement a nightly tourism tax on accommodation providers will also further increase costs, although there is not yet clarity on how this will be implemented.”
Ms Boydell added that the consumer demand outlook was also clouded following the Budget.
She said: “Amid ongoing macroeconomic and political uncertainty – including cost pressures from the UK Budget – we remain cautious about consumer demand and cost inflation.”
The comments came as its third quarter update showed a return to profit growth in the third quarter after a more difficult first half.
Overall underlying earnings in the first nine months of the year so far fell to £140.2 million from £171.7 million a year earlier, impacted by about £30 million of cost increases, including the minimum wage rise and national insurance contribution hike in April.
