A group of Travelodge landlords has hit back at the hotel group's request for sizeable rent cuts, by reportedly threatening to set up their own rival operator in which property owners retain a share of the profits.
Last month UK hotel group Travelodge, owned by Goldman Sachs and New York hedge funds Avenue Capital and GoldenTree Asset Management, asked for rents to be cut from 20% to 80% for the next 18 months, saving the group some £146 mln (€164 mln). It raised the idea of pursuing a company voluntary arrangement (CVA) if terms were not agreed.
The Travelodge Owners Action Group, which is said to represent the landlords of more than 400 of the group's 580 hotels, initially issued a counter-proposal, allowing Travelodge to defer March rents and 20% of each successive month's rents until Christmas. If Travelodge stuck to terms for the next two years, the landlords offered to write off this deferred sum at the end of 2021 - equivalent to £73 mln.
But after failing to reach an agreement with the hotel chain, the Travelodge Owners Action Group told the Telegraph newspaper that they were now pivoting towards evicting the brand.
The group's leader Viv Watts said: 'Travelodge does not own its hotels, so they are reliant on other landlords to invest in the real estate. We have more than £100 mln in commitments from other private investors to create a Travelodge 2.0., which would give landlords a stake in the company.'
According to Watts, at least 150 landlords are on board with the plan.
Earlier during the pandemic, Travelodge was also threatened with legal action by Combined Property Control Group, which argued that the group should be able to honour its commitments as it was receiving support from the UK government.
Travelodge has said it expects to lose £350 mln in sales this year and that it will take 'several years' to return to 2019 earnings. The first half of last year saw the company increase its like-for-like revenues by 6% to £337 mln.
