Goldman Sachs-backed budget hotel operator Travelodge is expected today to file documents for a company voluntary arrangement (CVA) in an effort to cut rents and end a dispute with its landlords over its unpaid bills.
The company – which is owned by Goldman Sachs and New York hedge funds Avenue Capital and GoldenTree Asset Management – had been asking for rents to be cut from 20% to 80% for the next 18 months, saving the group some £146 mln (€164 mln). It has also refused to pay rent in the three months to end-March.
But landlords accuse the hotel chain of taking advantage of the virus pandemic to cut its debts at their expense. The landlords previously offered to write off one quarter’s rent and allow Travelodge to reduce its bill by 20% for the rest of the year. 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. If the company did not agree to the terms, they would forfeit the leases as soon as they were legally allowed to and replace Travelodge with a new budget hotel brand.
Viv Watts, who is representing a group of over 400 of the group's 580 hotels, said: ‘The latest plan appears to be an attempt to force through Travelodge’s original unjust proposal under the guise of a ‘non-traditional’ CVA, designed to enrich its offshore shareholders at the expense of UK savers and investors. As the majority coalition of Travelodge landlords, we are baffled by the suggestion that any form of CVA is a necessary course of action.’
She added: ‘We are ready to negotiate as soon as Travelodge shows some willingness to come to the table in earnest, rather than attempting to force through an expensive restructuring process without proper consultation.’
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.
