Travelodge Hotels Financial Analysis Report

The report provides an in-depth analysis of Travelodge Hotels' income statement, balance sheet, and other relevant financial data. It also includes a revenue management plan and discusses the importance of following legal laws specific to the travel and tourism industry. The report aims to assist Travelodge Hotels in managing their resources effectively and achieving their goals.

Travel and Tourism
Business Toolkit

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Rational and principles of revenue management in relation to travel and tourism industry
................................................................................................................................................1
P2 Specific sector of travel and tourism industry applies revenue management tool so to
generate more and increase profit...........................................................................................3
P3 Review on various stages of HR life cycle applied to travel and tourism industry for
retention and development of talent.......................................................................................4
P4 Develop performance management plan for travel and tourism industry for resolving
negative impact and issues related with staff retention..........................................................5
P5 Explore specific legislations which travel and tourism industry needs to stick on...........6
P6 Illustrate impact of employment as well as contract law on decision making process within
travel and tourism...................................................................................................................7
P7 Explore various financial statements and reporting mechanisms within Travelodge.......7
P8 Explicate importance as well as value of budget for controlling performance of variance.
................................................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Travel and tourism industry is one of the leading and fastest growing sectors within the
world. Tourism comprises of different activities related with individual travel for any specific
reason. Commercial organisations are enhancing their business in this rapidly growing industry
so that they increase their profit margin to satisfy requirements and needs of customers (Bayliss,
and et. al., 2014). In this report Travelodge Hotels Limited is taken into consideration which is a
private organisation which renders their services in hotels as well as hospitality industry. It is
headquartered in Thame, England, UK. They are second largest in UK budget hotel industry in
terms of number of bedrooms as well as hotels. This report comprises of principle and rationale
of revenue management as well as management tools. HR activities are reviewed for retaining
and developing talent. Furthermore, performance management plan is developed as well as
legislations related with this sector are mentioned. Apart from this, influence of employment and
contract laws has been discussed. At last financial statements are discussed and their importance
is explained.
P1 Rational and principles of revenue management in relation to travel and tourism industry
Revenue management is mainly affiliated to managing and controlling ratio of a company
related to cost and benefits. In context with, Travelodge travel and tourism industry is basically
related to formative and efficient management of company cost and benefits which is earned
from their cruises and accommodation overbooking. Revenue management concept consists
efficient management of standard rates, ADR, and availability of services as to increase revenue.
In context with, Travelodge it is required for their finance manager to effectively focus on
company cruises services, entertainment, accommodation, food and other related facilities which
will aid them to gain more profitability base (Budeanu and et. al., 2016). In addition to this,
manager is effectively required to evaluate behaviour of their customers Travelodge can
effectively able to offer their products and services in best way while raising its overall rate of
revenue. Mentioned below there are some certain rational and principles of revenue management
are defined below:
Rational and Principles of revenue management:
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 Revenue management efficiently aid an industry to create new products and service range
along with affordable pricing range which will further benefit company to effectively
conduct their business operations.
 Revenue management benefit company to reduce their cost which is primarily related to
traditional pricing tactics (Chang, Backman and Chih Huang, 2014).
There are some basic principles related to revenue management within travel and tourism
industry:
Market Segmentation:
Within this principle, customers are basically divided into two segments namely qualifies and
non-qualifies and this segmentation is mainly base on formative concept of consumer as to raise
revenues. With this segmentation provide numerous advantages to Travelodge in order to
increase sale and profit.
Historical Demand and Booking Patterns:
As per this principle, Travelodge by effectively evaluating its past historical information
and data can efficiently able to develop formative plan which will further help them conduct
their booking plan. It will benefit Travelodge to effectively evaluate actual requirements and
needs of their customer in order to increase their chances to gain more revenue and
advancements.
Overbooking:
This principle is mainly related to providing large number of reservations which is beyond the
total capacity. This procedure can further prove to be efficacious when a cancellation is done by
customers. Major reason behind this, is to increase overbooking level of so to raise revenue and
decrease approximate number of risk related factors which is basically related to refused service.
Revenue Management Tools
Mentioned below there are some revenue management tool described below:
Discount Allocation:
This tool will benefit Travelodge to provide different range of services and attractive
schemes related to discount schemes to their new and existing guest (Cohen, 2017). In relation to
this, company can offer different type of discount schemes in their booking section which will
further help them to raise their estimated number of margin sale. In addition to this Travelodge,
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can also give best effective services and discounts to their customer according to seasons in order
to effectively attract new consumer base form wide locations.
Capacity Utilization:
As Travelodge offer attractive cruise facility to their customer with having a limited
number of capacities in it (DeLacy and et. al., 2014). Thus in order to fully utilized that company
is required to properly evaluate and analyse their client capacity in order to increase their
revenue in best possible way. It is the basic responsibility of Travelodge general manager to
effectively analyse reservation capacity of their cruise as to offer proper facilities to their
consumers in best possible manner. For instance, if Travelodge is holding capacity of providing
cruise facilities to 150 passengers then it is required for company to effectively utilize that
capacity in order to gain more profitability and opportunities of growth.
P2 Specific sector of travel and tourism industry applies revenue management tool so to generate
more and increase profit
Travel and tourism consists various types of sector that include, travel trade, conferences,
tourism services, events, food and beverages etc. thus, Travelodge is required to effectively
manage and conduct their operations in order to gain more competitive advantages and growth.
By managing business activities in appropriate manner company can able to out stand their
performance which will further help them to increase their profitability and consumer base.
There is a general description given below:
Hotel industry of Travelodge
There are various types of industries within travel and tourism like they include pubs,
clubs, fines dining, fast food, lounges, resorts and hotels. This industry is considered as largest
growing sector as number of people visiting different countries is increasing. They not only
satisfy their customers but also give employment opportunity to individuals thereby enhancing
the economic growth of country. For managing their hotel in appropriate manner, revenue
manager of Travelodge needs to opt for various tools by which they can enhance their
profitability as well as have strategies through which they can attract large number of tourists.
For this revenue manager of Travelodge has opted for review score tracking tool for generating
high profit in best possible manner (Du Cros and McKercher, 2014). They provide their
customers with wide range of options by which they can fulfil needs of their customer by
furnishing enhanced services in required way. For being competitive within market, they need to
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make sure that they provide their customers with extra benefits by which they can retain them as
well as make sure that dynamic environment is given to them.
Management of Travelodge make use of their revenue in appropriate manner by making use of
review score tracking tool (Höpken and et. al., 2015). By making use of this tool, their customers
can give them score on the basis of services which were given to them and how was there
experience while staying there. Therefore to have positive impact on their revenue Travelodge
have opted for different measures such as healthy interaction with their customers both when
they are at their place and when they are not there. They have provided their visitors with free
wifi and also gives their customers with extra benefits who visit there place again and again. By
this management of Travelodge is able to have significant score in the tool from their visitors or
guests. This will assist them to improvise their market shares as well as enhance overall
profitability of organisation.
P3 Review on various stages of HR life cycle applied to travel and tourism industry for retention
and development of talent.
Human resources have their own life cycle where there are different stages, each have their
own challenges and their own part which create significant affirmative impact on overall
performance of organisation. Structure of HR life cycle with respect to Travelodge HR Manager
has been shown below which will lead continuous improvement in operations performed.
Recruitment: It comprises of a process in which HR Manager engage in the process of
sourcing the candidates, hire the appropriate and right for specific job. This has important role in
improvisation in turnover, productivity and growth of Travelodge. For this, it is mandatory for
HR Manger of hotel to have appropriate rules and strategies by which they can acquire a person
who is skills and have effective knowledge related with specific domain. Like as they are serving
in travel and tourism industry, employees need to have impressive communication skills by
which they can please their guests and must provide the outstanding services so that these guests
visit there place again. It is necessary for Travelodge HR Manger to make sure that employees
must have adequate knowledge, skills and must have equivalent educational qualification. When
the management of the company hire employees than after hiring they organise induction and
training programs so that they can retain employees and help in the development of their skills
and knowledge.
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Education: According to working environment and in domains where individual have to
provide services, they are being trained and educated so that they can fit into their new job (Hunt
and et. al., 2015). With respect to Travelodge, HR manager needes to formulate strategies
through which they provide new candidates knowledge with clearing their roles, responsibilities
and what organisation expect from them while they are rendering their services. Along with this
HR manager is required to furnish them with knowledge related with their working culture and
values which will result in high efficiency in future. In induction and orientation sessions, the
manger of the company provide information related to the organisational culture, policies and
strategies so that they can retain employees proving awareness about compensation and
beneficial polices. So they can show their loyalty towards the firm.
Training and development: With recent changes within market, it is necessary for
Travelodge HR manager to introduce those changes within working structure and increase their
profitability by attracting more number of customers. While making these alterations, it is
necessary for HR manager to make sure that employees are provided with effectual training and
development programmes. This will lead to enhancement in their performance. In this
organisation, the HR manger can conduct training and development sessions so that they can
make improvement in the skills of the knowledge of the employees. With the help of this, they
can achieve their target and doing their work with more effectiveness. It can also provide them a
future and career development opportunity.
Motivation: For increasing turnover rate of organisation, motivation is an effective tool
which will strengthen their workforce thereby leads to high profits (Lamsfus and et. al., 2015).
With respect to Travelodge, HR manager and team leader has ensured that appropriate
motivation is given to employees either monetary or non monetary and also they must be
appreciated for their work. This will lead to enhanced performance of employees. In this firm the
manger can organise motivational sessions so that when they are demotivated, they can feel
motivate and complete their work with more effectiveness in efficient manner. This help in the
retention and development of the employee.
Retention: For retaining employees, it is necessary for Travelodge HR manager to provide
effective motivation. Like Travelodge is giving employees rewards for their performance as well
as recognition. This makes employees feel valued and a sense of security is developed in them.
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HR manager is responsible for analysing requirements of employees by which they can be
retained.
Evaluation: It is necessary for Travelodge HR Manager to evaluate performance of their
manager as well as other employees. It is done to ensure that manager is carrying out their
responsibility such as hiring, training and development of new employees in appropriate manner.
Whereas performance of employees is measured to analyse whether they are able to accomplish
their responsibilities within given time frame or not and to find out that they meet the desired
standard of services. In it, company HR Manager can organise appraisal process so that they can
monitor the employees performance and rewarded them for their good work. With the help of
this they can retain and motivate their employees.
Celebration: This is the last stage of HR life cycle, it is necessary for HR Manager of
Travelodge to reenergise their employees and thanks them for their hard work for accomplishing
the desired target or sales of services. With respect to Travelodge, they have opted for strategies
such as extra paid time for their HR manager so that they can empower and appreciate the way in
which they carried out their responsibilities. It is a way to say thanks to the employees for their
contribution in the development of the company. When the employees perform better then the
management organise celebration to motivate them so that they can enjoy their hard work and
make their loyalty towards the company in its future development.
All these mentioned steps will have relevant impact on employees as well as HR manager
of Travelodge Hotel. Apart from this it will also provide sense of being valued and
belongingness which will make them easy to retain their employees and productivity.
P4 Develop performance management plan for travel and tourism industry for resolving negative
impact and issues related with staff retention.
For accomplishing activities and objectives in appropriate manner it is essential for an
organisation to have effective management plan so that they can carry out their operations
thereby overcoming future challenges and attain more prosperity (Bayliss, and et. al., 2014). At
present scenario, Travledge is going through problems such as employee turnover rate is high,
lack of customers and conflicts in employees. This has created impact on overall performance of
organisation. For getting rid of them, performance management plan has been formulated by
Travelodge Hotel so that they can evaluate performance of their employees by which they can
attain high turnover rate. It is shown below:
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Assess current performance management process: It is essential for Travelodge to
identify their actual strength in terms of resources either human resources or materials.
Furthermore, existing management process is analysed which will assist them to attain their
objectives and goals (Budeanu and et. al., 2016). With respect to present scenario, it is necessary
for them to analyse the performance of their employees and the one who have potential must be
motivated so that they can be retained.
Set objectives and goals: After identification of mission, it is essential for Travelodge to
formulate goals and teams accordingly. Management can have conversation and collaboration
among employees for maximising their performance. They need to have clear goals and
objectives so that any kind of confusion among employees do not arises and they can work up to
their potential.
Create action plan: After goals and mission are set, an action plan is set by Travelodge
in order to have wide scope of performance. They have divided roles and responsibilities so taht
goals can be attained in stipulated time duration. By formulation of action plan they can they can
analyse each step which must be taken by employees while carrying out their responsibilities. By
having accurate guidelines, employees can be retained and their performance will also be
improvised. An action plan help in showing members of the community within the organisation.
It insure that they don not overlook any of the detail and understand what is and it is not possible
for the company. For efficiency it save time, energy, and resources for the long period of time.
Fir accountability, it increase the chances that people will do what needs to be done.
Action Plan
Strategic Goal Strategy Timeline
Organisation of workload To formulate a check list
along with a online diary and
respond to request made by
employees as soon as possible
Everyday it can be
maintained and cross
checked accordingly.
Retention of employees Motivate employees and
appreciate them with respect
their performance with respect
to roles and responsibilities
assigned to employees.
It will be carried out on the
quarterly basis.
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The goals of Travelodge has been shown above which were according to issues faced by
them. It is crucial for management of Travelodge to retain their staff so that they can carry out
their operations in framed manner and within stipulated time. This is the major issue which
organisation is going through, for this they need to develop effectual strategies like appreciating
employees for their work, giving them rewards on success of project and many other beneifts
either monetary or non-monetary.
All these activities will help to overcome challenges which are faced by Travelodge. This
will assist organisation to engage their employees in their duties in appropriate manner. This will
enhance their performance.
P5 Explore specific legislations which travel and tourism industry needs to stick on.
There are many legislations are provided from the government side which are required to
adhere by the Travelodge while functioning their operations. These legislations governs the
different rules and standards which that help an organisation organise their work according to
them and attaining high growth in market. Travel and tourism is large sector which has huge
contribution in the development of economy. For its effective regulation and removal of adverse
impacts specific laws are provided that help to maintain sustainability in functioning. It is the
duty of manager of Travelodge is to follow all the legislations and regulation consistency within
the operations of organisation. The different legislations that must require adhering by Travel
and tourism organisation are defined below:
Health and safety Act 1947: It is one of the important act which is needed to be
followed by the every organisation a this governs the rules regarding the safety of employee. It is
the duty of the manager of organisation is to provide adequate safety measures to their
employees while they perform their work within the organisation (Chang, Backman and Chih
Huang, 2014). For example, if employee of Travelodge work in hazardous situations then they
have to well equipped by the safety tools like gloves, helmets etc. If the different standards and
regulations are not followed then organisation has to face many issues and pay hefty fines. On
the other hand, if the rules are followed then this will have positive impact upon the image of an
organization and allows organisation build their good image within the market.
Wages Act: This is also one of the important and general act which is required to follow
and comply by the travel and tourism organisation while operate their business within the
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business environment . This act brings obligation upon the organisation that they have to provide
equal wages to all the employees according to their job role. This will be beneficial for a
Travelodge in the situation when they calculate their brand image and goodwill in market.
The Package Travel Regulations, 1992: Within UK, anyone who sells package holidays
like Travelodge must adhere to this law. This comprises of contract in written to individual who
has opted for the package along with details of dates, food, transport, accommodation and
location (Cohen, 2017). This regulation is provided to people to ensure that what all they will
have while they are in holiday.
Equality Act: This act comprises that organisation have to follow the rules and
regulations regarding equality. This brings an obligation upon the management of an
organisation that treat all the employees equally irrespective of their position. This will help the
organisation build the positive working environment and attain the trust of employees (Lamsfus
and et. al., 2015). As per this Act, in all the activities management of organisation (Travelodge)
is needed to be equal like in the process of recruitment, disbursement of duties etc. It helps an
organisation to improve image in market.
Tourism Act, 1969- It is an tourism act which is developed by the British tourist
authority and tourist Boards for England. This act is developed for giving of financial assistance
out of public funds for the provision of new hotels and the extension, alteration and making
improvement in existing hotels. So that they can operate their business effectively in an efficient
manner.
P6 Illustrate impact of employment as well as contract law on decision making process within
travel and tourism.
Employment and contract law significant impact on Travelodge decision making and
services which they are offering. Suppose if they do not have adequate number of staff then they
will not be able to satisfy needs of their customers and provide them with what they want.
Furthermore, if services are given to their customers by them will be delayed or will not be up to
the desired standard. For this they need to have effective staff and follow all the laws which are
associated with employment. They also need to have contract law in which certain terms and
conditions must be mentioned which employee has to follow during course of their duties. If
those terms are not followed by employees, than organisation can take steps which are
mentioned in their contract law. Furthermore, these laws will also provide employees with job
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security options and their performance (DeLacy and et. al., 2014). Appropriate adherence to
these laws will have great impact on operations of Travelodge and they will be able to carry out
their responsibilities in ethical and legal manner. Contract and employment law affects business
as the major purpose of each business is to provide goods and manufacture products according to
the neds and demands of the customers. If the organisation will not properly these laws then it
can lost its employee and reduce its customer base then it negatively influence the decision
making. If the management of the company properly provide befits and rights according to these
laws then they help in employees retention of the employees and increase or develop the bsueins
of the firm.
By making use of contract act like The Package Travel Regulations, 1992 and
employment act like Employment Act 2002, Employment & labour law 2019 are must to be
followed by Travelodge if they want to render services in effective way. The decision making
process is strongly affected by this as they cannot make alterations in their package as if they
make changes they have to inform their customers in written. Furthermore, they have to be
careful while designing the packages. Apart from this, they need not to use any kind of
discrimination or any sort of illegal practices in their premises.
P7 Explore various financial statements and reporting mechanisms within Travelodge.
There are different types of financial statements which signifies overall performance of
organisation and way in which they are used by management, creditors and lenders for
identifying efficiency of organisation. They are illustrated below:
Income statements: This comprises of exact financial performance of Travelodge Hotel.
This statement is given by public organisation which comprises of major aspects related with
their (Travelodge Hotel) financial performance. It includes the total income which has been
generated by hotel (Du Cros and McKercher, 2014). It consists of financial statements which are
used for assessing performance of Travelodge and their financial position. It will assist
management to summarise the expenses as well as revenues which are generated by Travelodge.
For example, Travelodge management is required to manage their income statements records
that mainly include, evaluation of sales revenue, taxes, cost of goods sold, selling general and
admin(SG&A) and net income.
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(Source: Travelodge Hotels Funding, 2019)
From above figure, it is clear that as compared to previous years there has been
significant impact on performance in 2017. There growth is around 7% with respect to 2016.
Balance sheet: This statement includes in as well as outflow of cash of Travelodge within
a specific time frame. Cash flow of organisation is classified in various parts; they are financial,
operating and investing activities. Basically, it is a overall performance of organisation which is
mentioned in sheet for estimation of profit earned within given moment of time. It is a statement
of financial position of business which comprises of liabilities, owner's equity and assets
associated at peculiar moment of time. It will assist Travelodge to identify net worth of their
business. For example, Travelodge is required to formulate balance sheet in formative manner in
which hotel is required to effectively entity assets, current liabilities, plant, property etc. into
distinctive grouping.
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Illustration 1: Travelodge Hotels Income Statement

(Source: Travelodge Hotels Funding, 2019)
It is clear from above mentioned figures that in 2017, the assets of Travelodge were 144.7
whereas in previous years it was 122.4 m, 121.6m, 92.2m, 85.9m simultaneously in years 2016,
1025, 2014 respectively.
Statement of modification in equity: This includes alterations which have being
occurred within a given time interval. These changes within sheet are in form of losses (if
occurred), dividends, purchase of share and profits gained by Travelodge (Hunt and et. al.,
2015). This statement analysis the changes in financial statement of Travelodge which outlines
the funds are being used and their sources along with their justification with respect to alterations
in working capital and cash.
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Illustration 2: Travelodge Hotels Balance Sheet

P8 Explicate importance as well as value of budget for controlling performance of variance.
Proper and effective budget assists organisation to carry out their operations in effectual
way without hampering any of their functions in terms of financial obstructions. Value and
importance of budget to Travelodge is mentioned below:
Appropriate budget will facilitate Travelodge to have an eye on every activity is being
carried out within hotel like finance, housekeeping and many more. This will assist them to carry
their operations in required standard (Höpken and et. al., 2015).
 Budget is crucial for every organisation and same goes with Travelodge Hotel. By this
they can evaluate how much they need to invest in any specific department so that their
performance can be enhanced and attain growth in future perspective in continuous
manner.
 Budget assists Travelodge to create a plan for ensuring that money is spend carefully and
also make sure that they have adequate money by which they can carry out operations in
future.
 It will also assist management to attain consensus with respect to resources which must
be allocated for realization of organisations quantifiable goals for annual period.
Performance of variances defined the difference between the budgeted cost and expected
income for an captivity and the actual cost or income for the activity. It help in making increment
in the wage rate and decline the productivity of workforce. It is used for determining whether
there is any statistical difference in between unrelated or independent groups. It renders evidence
of existence of mean equality among groups. Basically, it is utilised for detection of relevant
factors. It is a statistical model which is observed variance in with respect to specific variable is
partitioned into different components attributable to different sources associated with variation.
In 2017, the income which was attained by Travelodge was 7% more than that of previous years.
Along with this, net income in 2016 was 2.6m whereas in in 2017, it is 10.7m. This denotes
thatthere is relevant enhancement in performance of Travelodge.
CONCLUSION
From above mentioned report, it can be concluded that travel and tourism business toolkit
has crucial role for carrying out operations of organisation. This report includes revenue
management plan which will assist them to manage their resources in required manner. Apart
from this legal laws are included which must be followed by this industry to accomplish their
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goals in best possible manner. Furthermore, different financial statements are analysed and their
importance for an organisation. These statements will aid them to analyse what amount can be
used in which activity.
REFERENCES
Books and journal
Bayliss, J. and et. al., 2014. The current and future value of nature-based tourism in the Eastern
Arc Mountains of Tanzania. Ecosystem Services. 8. pp.75-83.
Budeanu, A. and et. al., 2016. Sustainable tourism, progress, challenges and opportunities: an
introduction.
Chang, L. L., F. Backman, K. and Chih Huang, Y., 2014. Creative tourism: a preliminary
examination of creative tourists’ motivation, experience, perceived value and revisit
intention. International Journal of Culture, Tourism and Hospitality Research. 8(4).
pp.401-419.
Cohen, S., 2017. Decline, renewal and the city in popular music culture: Beyond the Beatles.
Routledge.
DeLacy, T. and et. al., 2014. Green growth and travelism: Concept, policy and practice for
sustainable tourism. Routledge.
Du Cros, H. and McKercher, B., 2014. Cultural tourism. Routledge.
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Höpken, W. and et. al., 2015. Business intelligence for cross-process knowledge extraction at
tourism destinations. Information Technology & Tourism. 15(2). pp.101-130.
Hunt, C. A. And et. al., 2015. Can ecotourism deliver real economic, social, and environmental
benefits? A study of the Osa Peninsula, Costa Rica. Journal of Sustainable Tourism.
23(3). pp.339-357.
Lamsfus, C. and et. al., 2015. Going mobile: Defining context for on-the-go travelers. Journal of
Travel Research. 54(6). pp.691-701.
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