domingo, abril 21, 2024

Travelodge proposes new deal to end landlord row

Travelodge Image copyright Getty Images

Budget hotel business Travelodge is to propose a new restructuring plan that it hopes will end a row with landlords and protect thousands of jobs.

The company wants landlords to agree £144m of temporary rent cuts on its 564 sites in return for fresh investment.

Travelodge, whose backers include Goldman Sachs, has 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.

Travelodge is due to file for a limited form of bankruptcy – a company voluntary arrangement – on Wednesday that would allow it to force through rent cuts if necessary.

However, the company is not planning hotel closures, and has said it will start paying full rent again from the end of next year.

Like most hotels, Travelodge has suffered amid the coronavirus lockdown as holidays, events and business trips are cancelled.

The company has come under fire from landlords, according to Sky News, which first reported the Company Voluntary Arrangement (CVA) deal.

New funding

Travelodge is arguing that it will lose £350m in sales due to the lockdown and that 10,000 jobs are at stake.

The company’s owners will use Travelodge’s £100m of reserves, £100m in new borrowings and £40m in fresh cash to prop up the firm.

The proposal will also include a share of profits above £200m, once business recovers.

But landlords will only receive a fraction of the rent they are owed until the end of next year. Some landlords have previously threatened to seize the hotels and run them themselves, the Daily Telegraph has reported.

Most are getting more than 50% of what they are owed, but for 37 lossmaking hotels they are paying no rent.