Travelodge, the budget hotel operator with nearly 700 hotels, has entered into a Company Voluntary Arrangement (CVA) to allow it to restructure its business while keeping its hotels open.
Travelodge has been in negotiations with its landlords to secure a waiver of rent, up to £146 million according to the Financial Times.
The chain currently operates 589 Travelodge hotels in the UK, Spain and Ireland as of February 2020. The majority of Travelodge’s hotels are shut, although some have remained open for care workers.
The CVA is primarily concerned with the ability of Travelodge to issue new secured debt on top of existing loans or bonds according to Bloomberg.
The process, known as priming, has seen Travelodge receive “a 60 million pounds ($75 million) super senior revolving credit facility from its shareholders. The new debt ranks at the same level as its senior secured notes for payment obligations, according to a statement, but would rank ahead of them in terms of repayment claims.”
Travelodge is owned by investment firms including Goldman Sachs, Avenue Capital and GoldenTree.
Speaking on the Today programme this morning, Viv Watts, who owns two Travelodge hotels and is representing a group of over 80 landlords, said that Travelodge has asked some landlords to “accept a 75% rent reduction from March to December and then a 30 percent reduction for next year.” Others had been asked for “a 100 percent rent reduction for the nine months of this year and 100 per cent rent reduction for the whole of next year.”
Criticising the lack of engagement, Mr Watts said that instead, Travelodge has “employed very expensive consultants and advisors to force this process through when we have given them a solution.”
The hotel company previously went through a CVA in 2012.
As stated in the piece, the majority of Travelodge Hotels are currently shut due to the pandemic.
When the hotels are allowed to reopen, they will do so, and the insolvency proceedings will not affect bookings.