Full Year 2016 and Q4 Financial Results

For the year ended 31 December 2016

Release: 28 February 2017

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2
 Good Revenue Growth, Outperformance and
Strong Growth in New Openings
2016 Full Year Headlines

 Revenue up 6.8% to £597.8m (2015: £559.6m)

 LFL RevPAR(1) up 2.5% to £39.34 (2015: £38.38)

 1.2 pts outperformance vs. STR Midscale and Economy Segment

 19 new hotels opened

 EBITDA up £5.0m to £110.1m (2015: £105.1m)

 Cash of £73.9m at the year end

 Cautious on macroeconomic outlook

 Cost pressures from National Living Wage, apprenticeship levy and business rates

 Remain well positioned with strong development pipeline

1. RevPAR is computed as the product of the Average Daily Rate for a specified period multiplied by the Occupancy for that period.
Like-for-like (“LFL”) RevPAR compares the RevPAR in FY-2016 vs. FY-2015 on the basis of RevPAR generated by hotels that were opened before 1 January 2015.

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 Full Year 2016 and Q4 Results

4
 Continued Progress on Our Strategic Objectives

Distinctive Brand:
2016 Highlights
 National advertising presence
Raise Quality
Image  Quality brand partners e.g. Sleepezee Royal Warrant Beds
 Successful business customer
advertising campaign
 Focus on ‘businesses on a budget’
Best for Business:
Win Share in a  Direct national accounts team  Business membership launch
Growing Market  Business account card
helps drive direct business sales,

 New website from April 2016

up 29%
Win the Web: Grow
 Continue to drive app downloads
Direct Digital Sales  New look upgraded website
 Strong paid and unpaid search presence
driving further improvements in
 Airline style yield management system (IDeaS) conversion
Price is Right:
Optimise Rate and  Central pricing team
Occupancy  Analytics-driven pricing strategy  Continued gains in revenue
management drive

 Detailed customer feedback drives action outperformance

Moments of Truth:
 Standardised work processes
Drive Consistency  New breakfast offer supports
 Targeted training
record year for F&B, sales up
14%
 250 potential locations identified
Development:
 Maintain leasehold growth in London and Regions
Extend UK Network  Excellent momentum in
 Principally new-build hotels opened under lease
development pipeline

5
 ‘Travelodgical’ Advertising Campaign

6
 New Business Account Programme

Simple registration page

New dashboard

7
 Upgraded Desktop and Responsive Mobile Website

Mobile Tablet Landscape

Portrait

Optimised for tablet use

Clearer simplified booking journey

Easier to add up-sell items

8
 Development Momentum – 19 hotels opened in 2016 and 5 in
the fourth quarter
Recent opening examples

Manchester
Andover
Stockport
British Army HQ
76 rooms Regional City
bar café 83 rooms
bar café

Thetford Kings Lynn

Market town Market Town

62 rooms 68 rooms
vending vending
free parking free parking

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 Good 2016 Operating Metrics
Continued RevPAR growth and outperformance

Strong RevPAR Growth Driven by ADR Increase and Steady Occupancy

LFL1 RevPAR (£)2 FY-16 RevPAR Growth Outperformance

FY 2016 vs. FY 2015

39.3
2.5%  RevPAR: like-for-like UK RevPAR
growth of 2.5%
38.4 1.4%

 RevPAR vs. Market:

outperformance vs. the MS&E
YTD 2015 YTD 2016 STR MS&E Travelodge segment growth rate in 2016 by
approximately 1.2% points

LFL1 Occupancy (%)2 LFL1 ADR (£)2

 Occupancy: occupancy remained
stable at c.76%
51.7
76.6 76.1
 ADR: continued improvement
increasing by 3.1% vs. 2015
50.1

YTD 2015 YTD 2016 YTD 2015 YTD 2016

1. RevPAR is computed as the product of the Average Daily Rate for a specified period multiplied by the Occupancy for that period. Like-for-like (LFL) RevPAR compares the RevPAR in
FY-2016 vs. FY-2015 on the basis of RevPAR generated by hotels that were opened before 1 January 2015.
2. Occupancy, ADR and RevPAR for UK leased estate only.

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 Good Overall Q4 Financial Performance
Good total sales growth with EBITDA improvement

Financial Performance Has Remained Strong

Revenue (£m) EBITDA (£m)

21.2 22.5
148.9

138.6

Q4-2015 Q4-2016 Q4-2015 Q4-2016

Q4-2016 vs. Q4-2015

 Revenue increase of 7.4%/£10.3m was primarily due to:

o Like-for-like UK RevPAR growth of 1.9%
o Annualisation and maturity of the 12 new hotels added in the 2015
o Opening of 19 new hotels year to date
o International growth 42%/£0.8m
 EBITDA was driven by:
o Continued sales growth and positive drop through
o Impact of national living wage

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 Good 2016 Revenue and EBITDA Growth
Good sales and EBITDA growth

Financial Performance Has Remained Strong

Revenue (£m) EBITDA (£m)

597.8 105.1 110.1

559.6

YTD 2015 YTD 2016 YTD 2015 YTD 2016

FY 2016 vs. FY 2015

 Revenue increase of 6.8%/£38.2m was primarily due to:

o Like-for-like UK RevPAR growth of 2.5%
o Annualisation and maturity of the 12 new hotels added in the 2015
o Opening of 19 new hotels year to date
o International growth 33%/£2.5m
 EBITDA was driven by:
o Benefits of higher revenue and cost efficiencies
o Increased rent expense from the one-off CVA category 2 rent reset of approximately £2.6m
o Impact of national living wage since 1 April 2016

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 Continued Good Free Cash Flow
Good cash conversion and lower capex

Comment

£m FY 2016 FY 2015 Diff. FY-2016 vs. FY-2015

EBITDA before Exceptional Items and IFRS Rent Charge 110.1 105.1 5.0  Working Capital inflow of £7.7m in FY-
2016 vs £20.3m in FY-2015 primarily due
Working Capital 7.7 20.3 (12.6) to:
o Timing of payments around the quarter
Net Cash Flows from Operating activities before Exceptionals 117.8 125.4 (7.6) ends.
Capital Expenditure (37.4) (51.1) 13.7 o 2016 year-end cash position benefited
from the timing of some rent and
Free Cash Flow Generated 80.4 74.3 6.1 creditor payments made shortly after
year-end.
Interest Costs - Bank Interest Paid (22.0) (14.8) (7.2)  Net Cash from Operating Activities
decreased by £7.6m, primarily due to:
- Bond Interest Paid (16.8) - (16.8) o Working capital impact noted above.
- Finance Fees Paid (0.2) (0.4) 0.2  Capital Expenditure decreased by
£13.7m, primarily due to:
Interest Income 1.1 0.4 0.7 o Completion of the modernisation
programme in December 2015.
Interest Element of Finance Lease Rental Payments (4.5) (4.2) (0.3)  Bank and Bond Interest Paid increased
by £23.8m, primarily due to:
Cash Spend on Provisions and Exceptional Items (26.8) (7.3) (19.5)
o New bond, and bank interest moving
Non-Trading Cash Flow (69.2) (26.3) (42.9) from PIK to cash paid from the
beginning of 2015.
Cash Generated 11.2 48.0 (36.8)  Provisions and Exceptional Items
spend includes refinancing costs £15.3m,
Refinancing and Repayment of Investor Loan (14.2) (10.0) (4.2) CVA fund £3.9m and other provisions and
exceptionals £7.6m.
Movement in Cash (3.0) 38.0 (41.0)  Refinancing outflow of £14.2m
comprising: Flare Facility Repayment
Opening Cash 76.9 38.9 38.0 £12.9m, Term Loan Repayments
£371.3m, Bond Issue £390.0m and
Closing Cash 73.9 76.9 (3.0) Repayment of Investor Loan £20.0m.

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 Net Debt and Leverage

Debt (£m) Liquidity

 Cash on Balance Sheet: £74m

£m FY 2016

 Revolving Credit Facility: £50m (unutilised)

Cash and Cash Equivalents 73.9

 Letter of Credit Facility: £30m (£17m utilised)

Senior Secured Notes 390.0 Financial Ratios

Finance Leases 31.8

 Net Senior Secured Debt / EBITDA1 = 2.9x

 Net Third Party Debt / EBITDA1 = 3.2x

Total Third Pary Indebtedness 421.8

1. EBITDA based on 2016 unaudited EBITDA of £110.1m. Net debt is net of cash and cash equivalents.

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 Summary and Outlook
Strong 2016 results, cautious on macro outlook but remain well positioned

 Continued RevPAR growth and market outperformance

 Strong cash conversion

 Good progress on strategic initiatives

 19 new hotel openings in the year, 5 in quarter 4

 Cautious on macroeconomic outlook

 Cost pressures from National Living wages, apprenticeship levy and business rates

 Remain well positioned with strong development pipeline

 2017 focus on business customers, CRM, revenue optimisation and ongoing new
openings

15
 Q&A

16
 Appendices

17
 Company Background

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 Company Overview FY 2016

Who We Are Where We Are

 UK’s second largest hotel brand based on number of hotels and rooms United Kingdom International
 Positioned in the attractive value segment with 543 hotels and serving  66 Hotels  5 Hotels
18m business and leisure customers London  8,628 Rooms Spain  621 Rooms
 21% of total  2% of total
 Well invested modernised hotel portfolio Rooms Rooms

 Well balanced approximately even business / leisure customer split

 460 Hotels  12 Hotels
 Almost 90% booking direct, with 79% through own websites Regions3  30,699 Rooms Ireland4  899 Rooms
 75% of total  2% of total
 Low upfront capex leasehold model Rooms Rooms

Key Statistics (FY2016)

Hotels 543
Rooms 40,847
Occupancy¹ 76.1%
ADR¹ £51.7
RevPAR¹ £39.3
Revenue £597.8m
EBITDAR £281.8m
EBITDA £110.1m
Rent Cover2 1.6x
1. Occupancy, ADR and RevPAR for Travelodge UK leased Hotels only.
2. Represents the ratio of EBITDAR to net external rent payable.
3. Includes 12 hotels operated under management contracts.
4. Operations in Ireland under a master franchise.

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 Key Credit Highlights

1 Strong Market Dynamics for Growth in Value Hotel Sector

Strong Market Position with High Brand Recognition, Scale and Extensive, Diversified
2 Network of Hotels

3 Well-invested Portfolio with Strong Quality Levels

Operational Improvements and Powerful Direct Distribution Model Drive Strong

4 Financial Performance

Tight Cost Control and Low Upfront Capex Leasehold Model Drive Strong Profitability
5 and Cashflows

6 Growing and High Quality Rooms Pipeline

Experienced Management Team with a Track Record of Delivering Operational and

7
Financial Improvements

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