Travelodge Ltd: Inflation Impact Analysis, Causes & Mitigation

This report examines the impact of inflation on Travelodge Ltd, a UK-based tourism company, focusing on the period and causes of inflation, particularly the Covid-19 pandemic and poor monetary policy. It discusses the negative effects on the organization, including decreased demand and profitability. The report explores various theories and models, such as contractionary monetary policy and diversification strategies, that Travelodge has employed to mitigate the adverse effects of inflation. It also highlights the importance of long-term inflation expectations and collaboration with global organizations. The analysis includes financial data indicating losses due to inflation and strategies for cost reduction and expansion into new markets. The report concludes that while inflation severely affected Travelodge, proactive measures and government support have helped in managing the challenges.

FUNDATION YEAR RESEARCH PROJECT
INTRODUCTION
 Inflation is the prevailing circumstances where an economy
faces the problem of higher prices and lower demand.
 It impacts all the organizations but in this case Travelodge Ltd.
Has been taken into consideration which is getting operated in
tourism business form so long and went through this phase
(Sofronov, 2018)
 The poster will be discussing causes which led the organization
to be affected in term of its ability of making profits.
 At the end some better theories and models would be discussed
in order to reduce the negative impacts of inflation over the
entity.
REFERENCES
 Séraphin, H. and et.al., 2018. Events and tourism development within a local
community: The case of winchester (UK). Sustainability. 10(10). p.3728.
 Rita, P., Brochado, A. and Dimova, L., 2019. Millennials’ travel motivations
and desired activities within destinations: A comparative study of the US and the
UK. Current Issues in Tourism. 22(16). pp.2034-2050.
 Kovaçi, I., Tahiri, A. and Bushi, F., 2020. Travel and Tourism Industry
Development-The Case of Kosovo. Analele Universităţii din Oradea, Seria
Geografie. 30(2). pp.147-156.
Theories and models
 There are range of models which could be used to deal with
the situation of inflation and reducing the all negatives it
brings to an organization. Over the time, Travelodge has faced
some severe issues which led it to be trapped in inflation.
 “Contraction monetary policy” has been used by the
organization to reduce the negative impacts of inflation. It has
been quite drastic since in the year 2020 the inflation started
taking a sharp upward turn. Which led it to be quite higher till
the year 2021 (Price, Wilkinson, and Coles, 2022) there were
range of causes but the biggest was Covid-19 so in such
predicament it became highly essential for the organization
applying this model. They brought a new organizational
monetary policy. This policy was all about reducing the
charges so can bring more customers and can attract them. In
these predicaments of inflation, the customers are less likely
to spend out of pocket. So the sole way to grab their attention
was to offer them salubrious packages (Sharma, Thomas, and
Paul, 2021)
Overview of the organization and their product and services
 Travelodge is a UK based private entity which is
engaged in tourism sector. The organization came into
existence in the year 1985. it is having around 11000
employees at present across the world. The
organization is having its total revenue around 63.71
cores GBP as per the data extended in the year 2018.
The collaborative practices made the organization
achieve its position. In last couple of years, the stars of
the entity went in ditch which led severe repercussions
to the entity (Kovaçi, Tahiri, and Bushi, 2020)
Period and causes of inflation the entity has faced in the past
Covid 19: This was the major reason due to which the company operations had
been impacted in negative manner. Further, it was seen that due to pandemic
there were certain operations that could not be carried out easily and due to
this the company was unable to provide the services to large number of target
customer. Furthermore, it was reported that due to such kind of pandemic the
firm was also not able to plan better activities within the business as the firm
was forced to keep the prices of its various packages higher that had not
allowed the firm to attract more customers in current times.
Poor monetary policy of government: Monterey policy of the government
was another reason that had created the problems of inflation. Also, due to
improper development of the monetary policies it was reported that there was
higher inflation rate and there was not right circulations of the money within the
economy. As such people of the country were not able to fulfil the basic needs
that in the most efficient manner within their own country
CONCLUSION
Form the poster above it can be twigged that the duration of inflation
affected organization in severe manner. This came with range of
negatives such as toppling demand of hotels, poor feedbacks of
customers, lack of innovative ideas in the organization, poor ability to
align with hyper sectoral development etc. Then some theories and
models were also depicted which could have been helpful for the entity
to deal with the crunches.

Notes
Overview of the organization and their product and services
 The organization is having more than 590 hotels and around 40000 guest bedrooms across UK, Spain, Ireland. It is also in collaboration with around 45000 small organizations working in the
same field. The organization is well-known for its services and the way it keeps its customer satisfaction before anything else. Travelodge is known for its luxury offerings and also for its
great ability to deal with the prevailing market circumstances. With the progress of time, the entity has expanded its realm of serving customers. Now it is in collaboration with some globally
working entities so can expand its operating diaspora.
 While talking about the products and services then the organization is engaged in rendering widely ranging services to its customers. Such as hotel, room, food etc. types of facilities. The
entity is also aligning with its international customer base so for their betterment and safety it also offers best sets of global services so can attract its widely disseminated customers.
Period and causes of inflation the entity has faced in the past
For the current company the main reasons of the inflations were identified that had caused the business or suffer huge amount of losses whole carrying pout various activities within the business (Séraphin
and et.al., 2018). Also, it had been identified through the report that inflation in 2020 was around 1.23% than compare to 2021 which was 4.70%. Thus, it can be said that inflation rate had been rise to
much higher rate that had caused the business to suffer a lot in mainly generated the daily revenues of business. Furthermore, having such period of the inflation had affected the business negatively
during such period. Moreover, travelogue major reason of inflation that has been reported are been described as below:
o Covid 19: This was the major reason due to which the company operations had been impacted in negative manner. Further, it was seen that due to pandemic there were certain
operations that could not be carried out easily and due to this the company was unable to provide the services to large number of target customer. Furthermore, it was reported
that due to such kind of pandemic the firm was also not able to plan better activities within the business as the firm was forced to keep the prices of its various packages higher
that had not allowed the firm to attract more customers in current times.
o Poor monetary policy of government: Monterey policy of the government was another reason that had created the problems of inflation. Also, due to improper development
of the monetary policies it was reported that there was higher inflation rate and there was not right circulations of the money within the economy. As such people of the country
were not able to fulfil the basic needs that in the most efficient manner within their own country
o Supply chain failure worldwide: Inflation was also major cause because it was reportedly seen that there was supply chain failure due to which the goods and services of the
company could not be supplied in the best possible manner (Rita, Brochado and Dimova, 2019). Furthermore, it was also due to this the business were not able to get easily the
goods and services that created further difficulties in carrying out the daily routine tasks of the business. Also, the supply chain effectiveness is very much essential as its allows
in easy consumption of various goods and services.
o Thus, the inflation causes were dependent upon various other factors but the major problem was excessive demand especially during the times of Covid that forced the business
to produce the goods in large amount of quantities and in higher prices. Also, in context of travel lodge that is focused mainly on targeting the people across various region it
becomes much difficult for the company to satisfy the needs of people in lower travel packages as the costing was increased. Thus, there were higher chances that people would
switch to other options that are available in the market so that certain needs are satisfied.
Research and reliable sources, theories and models which can be used to reduce the negative impacts of inflation and increasing the positive impacts
 There are range of models which could be used to deal with the situation of inflation and reducing the all negatives it brings to an organization. Over the time, Travelodge has faced some
severe issues which led it to be trapped in inflation.
 “Contraction monetary policy” has been used by the organization to reduce the negative impacts of inflation. It has been quite drastic since in the year 2020 the inflation started taking a
sharp upward turn. Which led it to be quite higher till the year 2021 (Price, Wilkinson, and Coles, 2022) there were range of causes but the biggest was Covid-19 so in such predicament it
became highly essential for the organization applying this model. They brought a new organizational monetary policy. This policy was all about reducing the charges so can bring more
customers and can attract them. In these predicaments of inflation, the customers are less likely to spend out of pocket. So the sole way to grab their attention was to offer them salubrious
packages (Sharma, Thomas, and Paul, 2021)
 As there is a mode named “Long term inflation expectations” which believes that if at once inflation has taken place then it may last for longer. So organization has abided with the same
policy they assumed that it would be impacting them for longer run so they made such a policy which may help to combat with such notions for longer period. They came in collaboration with
more globally operating organizations so can expand their branches and can make it more affluent in nature.
 As the financial statements of the organization are saying a lot about it. In the year 2020 the net loss were 54.2 million euros, which jumped to 99.1 million euros in the year 2021. it was all
due to inflation. But there have been some better skills such as there can be seen good adjustments when it comes to cutting in the costs. The organization reduced its costs so can deal with the
situation. But it did not reduce the employee cost in the same proportion as the other costs were reduced since that expenditure was quite needed to boost up the economy (Uğur, and Akbıyık,
2020)
 To keep the long term impacts in mind the entity has introduced new 295 hotels in February 2021 so can work in those areas where inflation was not impacting much and customers were
ready to pay more. It was the strategy of “Diversification”. Over the time, it is found that the strategy or theory of Diversity is quite fruitful. Which was used by the organization to deal with
the situation of inflation. On the other hands, it imparted IFRS 16, so can drive better control over its financial and non-financial aspects. This idea was implied to reduce the negative impacts
in longer run and also driving better outcomes favouring organizational performance. The government also taken some key steps to help such organizations and the entity has shown its
inclination to abide with government policies. It has also extended new realms of services to its customers (Safaeva, et.al.,, 2019)
REFERENCES
 Sofronov, B., 2018. The development of the travel and tourism industry in the world. Annals of Spiru Haret University. Economic Series. 18(4). pp.123-137.
 Price, S., Wilkinson, T. and Coles, T., 2022. Crisis? How small tourism businesses talk about COVID-19 and business change in the UK. Current Issues in Tourism. 25(7). pp.1088-1105.
 Uğur, N. G. and Akbıyık, A., 2020. Impacts of COVID-19 on global tourism industry: A cross-regional comparison. Tourism management perspectives. 36.p.100744.
 Safaeva, S. R. and et.al.,, 2019. Economic and Legal Aspects of Tourism Regulation in the New Economy: International Practice. Journal of Environmental Management and Tourism. 2(34).
pp.460-5.
 Sharma, G. D., Thomas, A. and Paul, J., 2021. Reviving tourism industry post-COVID-19: A resilience-based framework. Tourism management perspectives. 37. p.100786.