Main Photo: The new look Travelodge bedroom
Date: May 2020
Location: UK wide
No. of Keys: 400 of the 580 UK Travelodge hotels
Landlords: Travelodge landlords are plotting to seize control of the hotel chain amid claims that rent cuts proposed by its hedge fund owners would leave some facing financial ruin.
The Travelodge Owners Action Group, which claims to represent owners of more than 400 of the chain’s 580 hotels, is threatening to block the rent cuts and effectively shut down the company to create “Travelodge 2.0”.
The landlords say they could evict Travelodge, owned by GoldenTree, Avenue Capital and Goldman Sachs, and establish a new hotel operator to run their properties instead.
Viv Watts, who leads the group, said he has lined up financial backers and the support of at least 150 landlords.
He said: “Travelodge does not own its hotels, so they are reliant on other landlords to invest in the real estate. We have more than £100m in commitments from other private investors to create a Travelodge 2.0. which would give landlords a stake in the company.”
The plans represent an escalation of a row between Travelodge and its landlords that erupted as the pandemic forced hotels to close. Travelodge withheld quarterly rents due at the end of March and proposed rent reductions until 2021.
The property tycoon Nick Leslau, Travelodge’s biggest landlord with 120 hotels, and Mr Watts claim the company is trying to force through a restructuring under the cover of emergency Covid-19 laws that prevent landlords from taking action over unpaid rent.
Individual investors, local authorities and charities have also been affected. Bill Kayley, 80, who invested his pension into a Preston hotel, said: “I cannot pay back the bank if Travelodge forces through its current proposal.”
Travelodge wrote to landlords on May 13 appealing for their support, saying it expected to miss out on £350m in lost revenue due to coronavirus.
It also warned that if landlords did not accept lower rents it would attempt an insolvency process such as a company voluntary arrangement, a court process Mr Watts says he has the necessary support to block. Travelodge declined to comment on Mr Watts’ plans.
The Brand: Travelodge, owned by GoldenTree, Avenue Capital and Goldman Sachs. In 2012 the trio took control of the company from Dubai International Capital in a debt for equity swap.
They ploughed £75m into the company and in 2013, former Hilton deputy chief executive Brian Wallace was installed as chairman while Peter Gowers, who had previously held senior roles at Holiday Inn owner InterContinental Hotels, joined as chief executive later that year to help spearhead the turnaround.
Travelodge completed a £100m upgrade of its hotel rooms in December 2015, the same year it also recorded £100m in operating profits for the first time in its then 30-year history.
THPT Comment: One can’t help thinking this course of action might have been avoided in Travelodge took a different course of action….by talking to the landlords earlier in the game and getting a slightly fairer compromise?
First Seen: Daily Telegraph
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