Ago Hotels – a new hotel platform created by members of the Travelodge Owners Action Group – has formally issued legal documentation to over 200 owners of over 400 Travelodge properties, in a bid to tempt them to leave Travelodge and sign up to a partnership between Ago Hotels and French hotel chain Accor.
According to Ago, the timing is crucial, as Travelodge’s company voluntary arrangement (CVA) includes a provision for landlords to exercise a break option, or extend their leases with Travelodge by August 28.
Landlords who choose the lease extension forfeit their rights to exercise a break option.
New entity Ago is offering landlords a profit share in their own properties, as well as the entire Ago Hotels portfolio.
The operating platform has partnered with Accor, which will operate the hotels under its Ibis brand. In addition to meeting conversion costs and working capital requirements, Accor is also providing an ongoing financial facility, which Ago Hotels can draw-down to meet rent payments. According to the partners, this facility will ensure that rent will always be paid in the unlikely event of a sustained period of zero revenue in future.
Viv Watts, head of the action group, called the Travelodge lease extension 'worthless … like giving someone a pair of shoes but telling them to walk 100 miles barefoot to get them'.
Sebastien Bazin, CEO of Accor, said that Ago Hotels presented an opportunity for landlords to 'venture forward into the future of commercial real-estate where you can be an actor rather than a spectator of your fate'.
Speaking at a meeting with Travelodge landlords earlier this month, Bazin commented: 'The Ibis family stands itself as a brand which sees the highest certainty of achieving 75% occupancy, the best RevPAR Index and the greatest flexibility with respect to branding due to the 3 brands within the family.
Bazin added: 'Travelodge landlords should be comfortable with Accor’s commitment to the UK market; as a matter of fact Ibis has actually been in the UK for 10-years longer than Travelodge (since 1974) and it continues to see the UK market as a growth vector for the organisation.'
In June, Travelodge agreed a CVA with landlords to cut rent payments across its 580 hotels for the rest of 2020 and the whole of 2021.
However, property owners extracted lease-break concessions and bought time for creditors to challenge the terms.
