This has been standard practice at hotels for years - it's not just a Travelodge thing, it's an industry thing. Those of you who are absolutely certain that your hotels don't do this just haven't experienced it - if you're staying at a big hotel, they absolutely will be doing it. The fact that you haven't had it happen to you means they're (mainly) doing it well - the system works, as even with overbooking, very few people actually need to be booked out.
When I worked in hotels, the first job for someone on reception (or in reservations) every day was to do the 'ring round'. We'd phone all the other main hotels in town to see what availability was like. All the big hotels did it - we weren't doing it undercover. Then we knew what our options were likely to be if we needed to book out, and we'd make a plan if the scenario was likely to arise.
We'd also think about who we might book out. Obviously there's an element of 'first come first served', but we'd generally give 'private' bookings preference over conference/block bookings (if you're booked by your company for an event, you're less likely to be pissed off at having to stay elsewhere in town - you just get on with it).
It came down to the duty manager to do the actual booking out itself - dealing with unhappy people and having to tell them there's no bed for them isn't fun, but it's part of the job. We would bend over backwards to make it up to them though - meals, upgrades if possible, etc.
If hotels didn't overbook, prices would have to go up more - they have to try and max out their occupancy, and overbooking is the only way. If they only booked up to their actual capacity, they'd be left with empty rooms, and that's not a viable business model.
I do think it's totally unacceptable for rooms which are pre-paid in full though. In that instance, the hotel has had the money and should make sure those customers have access to them. But rooms which haven't paid before arrival are essentially fair game!