Travelodge is to invest £55 million refurbishing 175 hotels, but will drop 49 properties from its portfolio and ask for rent reductions at another 109 as part of financial restructuring plans.
The restructuring includes a Company Voluntary Agreement (CVA) agreed with its three key investors GoldenTree Asset Management, Avenue Capital Group and Goldman Sachs, aimed at tackling the group’s soaring debts.
Terms include £75 million of new money being injected into the company, with £55 million to be invested in 175 hotels, starting in early 2013.
Bank debt of £235 million will be written off, and £71 million repaid, reducing the group’s total bank debt from £635 million to £329 million.
But the proposed CVA will also see 109 hotels subject to rent reductions, and another 49 leaving the portfolio.
CEO Grant Hearn said the restructuring and CVA would leave Travelodge “in a much stronger position going forward and will ensure a long-term, sustainable future for the business”.
Last year Travelodge announced it had become the largest brand in London, overtaking Hilton in terms of room numbers (see online news March 30, 2011).
The group also announced plans to roll out a Metro hotel concept (see online news May 30, 2011), and earlier this year opened its 500th property in London’s Stratford, close to the Olympic Park (see online news March 1).
For more information visit travelodge.co.uk.
Report by Mark Caswell