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400 UK Travelodge hotels may change brand as landlords lose patience – and money

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The UK hotel industry may be facing one of its biggest shake-ups in recent years, as landlords of over 400 UK Travelodge hotels open talks over rebranding.

Accor, Marriott, IHG, Hilton, Jury’s Inn and Magnuson Hotels are among the groups who are in detailed discussions about taking over prime Travelodge sites, although the poor condition of many properties may mean that some fail to find a new home.

Travelodge has had financial problems for many years.  In 2012 it was saved from administration when its biggest lenders, Goldman Sachs, Avenue Capital and GoldenTree Asset Management, took over the company from its indebted owner, Dubai International Capital (DIC).  DIC had massively overpaid for the company when it acquired it from another private equity investor and was left with no money for investment, leaving the hotels to deteriorate.  The majority of the freeholds and long leaseholds had already been sold by this point.

Over 400 UK Travelodge hotels may change brand

The situation picked up after the lenders took control.  New money was pumped in to refurbish existing hotels and open new ones.  We reviewed the Travelodge PLUS in the City of London a couple of years ago and were impressed.  In general, however, the chain never came close to matching the reputation of Premier Inn (I am also a big Premier Inn fan myself) which could always count on the deep pockets of owner Whitbread.

And then coronavirus hit …..

Coronavirus hit and Travelodge was back at square one, with its debt burden quickly pushing the business to the brink.

Travelodge has had a bad relationship with its landlords since the 2012 restructuring.  This time around, affected landlords were asked to take an 80% reduction on 2020 rent and a 50% reduction in 2021.  This was eventually reduced to a 38% rent cut across 2020 and 2021.

The complex rules of a ‘Company Voluntary Arrangement’ restructuring mean that – in effect – landlords can be forced into accepting a deal that they do not want.  Other creditors can outvote them because the banks are owed more than the total of unpaid rent.

This time, however, landlords did extract one concession.  A break clause was inserted into leases of the hotels where Travelodge is no longer paying full rent.

Over 400 UK Travelodge hotels may change brand

The break clause is the escape route

The break clause means that Travelodge landlords can now break their agreements with the chain during the period when reduced rent is being paid.  It seems that most are rushing to do so.

Landlords representing over 400 of Travelodge’s 580 hotels refused to support the Company Voluntary Arrangement.  This group, who are working together as the Travelodge Owners Action Group, are now talking to the UK’s major hotel brands over switching.

Viv Watts, who is co-ordinating the landlords group, said in a statement:

“A majority of creditors took the difficult decision to support Travelodge’s CVA, an insolvency deal which will have a profound impact on many savers and investors across the UK, including employees, individuals, charities, pension funds and local authorities.

Following the inclusion of a landlord break option for over 500 Travelodge hotels within the terms of the CVA, we are in talks with a number of leading global hotel brands aimed at providing savers and investors with the long-term stability they require. Advanced discussions are ongoing with major operators such as Accor, Marriott, IHG, Hilton, Jury’s Inn, Magnuson Hotels and others. The purpose of this is to present a range of alternative options to Travelodge landlords, so that they can decide which structure would work best for them.

Travelodge’s conduct over the years has demonstrated a willingness to exploit landlords and ignore contractual lease obligations. This makes it necessary for landlords to seek a more equitable structure. The Travelodge Owners Action Group will continue to fight for a fair and just outcome for the savers and investors that underpin Travelodge but have been forced to subsidise the business”.

There is a real opportunity here for a hotel brand to pick up a critical mass of properties is one swoop.  Some landlords may be willing to take revenue risk and become operators themselves, using an established brand, whilst others will prefer to sign a new lease with an established branded hotel operator such as Interstate.

Marriott, for example, has been slowly rolling out its Courtyard brand in the UK and may welcome the chance to pick up a large number of sites in one go.

Accor – which tends to operate lower-budget brands than its competitiors – would also seem an obvious partner for some of the poorer quality and so cheaper Travelodge properties.

Magnuson Hotels, which you have probably never heard of, is a growing brand which uses its exceptionally low franchise fees as its selling point.

It will be interesting to see where this ends up.  Given that Travelodge had no loyalty scheme, it is likely that this will be a positive move for HfP readers with many hotels becoming part of points-earning brands.

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Comments (69)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Super Secret Stuff says:

    I smell a big win here for best western! Hopefully only the decent ones 🤣

  • Mark says:

    I wonder if the basic specification of Travelodge rooms will make it harder to reflag to a quality brand. Not just things like the decor which is a bit basic but the small pod shower rooms (functional but not luxurious) and the lack of air conditioning in the vast majority of hotels.

    I suspect that the hotels switching brands will be split into those moving to a more prestigious brand, making upgrades as necessary, with others moving to a brand that has less high standards.

    The future of the Travelodge brand is also uncertain especially if most of the nicer, better located, hotels jump ship.

    • The Savage Squirrel says:

      Less high standard than Travelodge? That can only mean a move to Britannia 😀 😀

      • Mark says:

        The Britania hotel in Edinburgh was last refurbished by Travelodge!

  • Ken says:

    Hard to imagine a weaker position for the landlords. The brand itself sits just above Britannia Hotels.
    I have stayed twice once in 2008 and once in 2015. Both times a distress purchase due to work and I would never stay again unless I absolutely had no choice.

    With reduced demand both mid week & weekend, the superior Premier Inn will be a couple of quid more in many cases for a far better experience.

    It’s not just rebranding they need but in many cases significant investment and proper management.

    The worst Travelodge’s are simply worthless- probably better knocking them down and starting again. They have simply been run for cash for a decade.
    If the best properties can do a deal and rebrand to say Marriott, then good luck.

    Will make the rump estate look even worse. Surely destined to go the same way as Little Chef.

    • Andrew says:

      At least when there was a Little Chef next door you could be confident of a really good Full English breakfast cooked to order.

      • old bob says:

        Little chef, now your talking, the Olympic breakfast great for banishing a hangover. I will miss Travelodge if it disappears completely. Mostly grubby, tatty, underinvested in and little viable future. In short a metaphor for post Brexit, post Covid, Britain.

    • mutley says:

      I once stayed in the Britannia Adephi in Liverpool, a Basil Fawlty like experience. After a dreadful sleepless night I emerged for breakfast. There was a chap on an adjacent table to me complaining loudly to anyone that cared to listen that this was the worst Hotel he had ever stayed at. The hapless staff took his breakfast away to be reheated, he picked up his teapot, the handle promptly broke off it, and deposited the contents into his lap.

    • RussellH says:

      > better knocking them down and starting again

      That can certainly work in the right location. Our nearby market town built a brand-new ‘visitor experience’ with attached shop, cafe, a few meeting rooms and about 30 hotel rooms in the 1990s. It did well until the visitor attraction was closed down following new animal health + safety rules. It managed to carry on OK until about five years ago, when the site got permission to turn into a Premier Inn and Brewer’ Fayre.
      The original building was not redeveloped, even though only around 20 years old. It was demolished and they started from scratch, and appears to be doing well (apart from Covid).
      There is also a pretty new Travelodge about 500m away, the other side of the trunk road, but you cannot see it from the road, while the Premier Inn is obvious to passing trade.
      And there is another Travelodge still being built (almost finished) just 6 miles to the west, which is to have an attached Marstons pub. For those who do not fancy breakfast in a pub, there is Tesco across the road too.

      • Chris says:

        Actually Marstons might be an option for some of them as well if there is space to build a pub next to the site.

        They have a number of lodge style properties at their pubs and they aren’t too bad. Rooms are fairly basic but decent enough for one night.

  • Chris Heyes says:

    Never stopped in a Travel Lodge nor a Premier Inn, The worst I’ve stopped it is a Ibis
    (that was clean though) just not a patch on Sofitel
    I pick Hotels with a Lounge normally Sofitel or Hilton if at Airports (Home or Abroad) or if I’m in a Capital. Daughter stopped in a newish Premier Inn in Blackburn to be at train station said it was ok but I wouldn’t like it
    My Partner likes to start our hols with a stop overnight before flight been a long standing tradition
    Can usually pick a suite up by booking a lesser room and asking for manager at check in
    If it works why not take advantage plus i like to get shut of suitcases night before flight
    We stop at Best Weston in US or a 4* or an unusual Hotel depending on where i like 1900s Hotels
    Only have Breakfast and possibly one meal in Hotels we stop at, we like to eat at different places when on holiday (only have Breakfast very early no lunch, Dinner whenever we feel like it
    Don’t even go back to Hotel before Dinner and yes sometimes get funny looks as in shorts
    But never bothered me (Partner always has a clean top or dress in a bag that creases drop out but not me i’m a scruff lol)

    • Chrisasaurus says:

      I’m not 100% sure that many people would be a fan of anything you have said…

      • Rob says:

        In many parts of the UK, the Premier Inn is the best hotel in town. Scarborough and Great Yarmouth are two that come instantly to mind.

    • Lady London says:

      None of us would have guessed anything like this.

  • Mark Timmins says:

    Travelodge has outperformed the whole of the budget sector and Premier Inn for the last 3 years, the brand is very different in recent years

  • TripRep says:

    Would be great if they became a Hampton Inn, 10k redemption obviously

  • theoldfunker says:

    I love a stay at a Travelodge as it’s so cheap but a big comfy bed, never had bad stopover at any Travelodge. I have used these hotels from Brighton to the West Country and always a friendly greeting and even last minute booking.
    It would be sad to see these roadside motels/ low budget go.

  • Lady London says:

    I met tbe FD of Whitbread many, many years ago and he told me Whitbread was getting into hotels. This was after a government review, presumably of the breweries due monopoly issues forced breweries to sell off a lot of their pubs.

    I thought hotels and Whitbread could not be a success. Another thing I was wrong about as Premier Inn has done so well. I never.thought Whitbread could move into pizza either. Er…. they bought the UK franchise of Pizza Hut, ran it very well and sold it at just the right moment for an excellent gain. I think they also recently sold Costa Coffee to Coca-Cola.

    Perhaps I should pay attention the next time Whitbread buys something 🙂

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