Bits: British Airways is paid £125,000 per month to fly to Newquay, 400 Travelodge hotels likely to rebrand as Ibis

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News in brief:

British Airways is paid £125,000 per month to fly to Newquay

British Airways was recently awarded the UK Government-subsidised contract to operate flights between London and Cornwall Newquay Airport.  The service finally began last week after various delays.  It had previously been operated by Flybe until the airline went into receivership.

The details of the contract have now been publishedBritish Airways submitted the only compliant bid and, as such, has struck a great deal.

It is being paid £878,000 to operate flights for a seven month period.  Given that there are only three flights per week at present, increasing to seven per week from September, this is a very attractive deal.  Once at full capacity, British Airways is receiving (£878,000 / 7 / 31) £4,046 per return flight.  It gets to keep the money from ticket sales on top.

Given the short flight time and the reduced loads likely on other short haul routes once the Summer holiday period is over, it is possible that Newquay will become the most profitable British Airways short haul route this Winter.

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400 Travelodge hotels likely to be rebranded as Ibis

Last month we ran a long piece about the troubles at Travelodge.

You can read our story about the Travelodge rebranding and financial crisis here.  To summarise, the (hedge fund) owners of Travelodge had put the business through a Company Voluntary Arrangement to allow it to restructure its debts.  The complex way that CVAs are structured meant that the landlords of the hotels could not block it even though their rent was being cut without their consent.

The landlords did, however, force a break clause into their lease contracts.  The owners of 400 hotels formed the Travelodge Owners Action Group in an attempt to negotiate a bulk move to a new group.

According to The Caterer, Accor has been selected as their preferred partner going forward.  If a deal can be finalised, the 400 hotels will rebrand under Accor’s budget Ibis brand.  Accor will pay the costs of rebranding, whilst a new operating company – jointly owned by the hotel owners – will take over the hotel leases.  Landlords will be guaranteed, at a minimum, the rent they were receiving from Travelodge prior to the CVA taking place, as well as a share of the profits.  Other non-Travelodge hotel owners will be able to become part of the operating company if they wish.

Separately, The Times reported that the owners of 80 Travelodge hotels who are not part of the Travelodge Owners Action Group are planning to start a new brand called Goodnight Hotels.

If both of these moves comes to fruition, Travelodge will be left with under 100 UK hotels.  The owners may decide to throw in the towel at this stage, potentially pushing the rump into receivership.

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Comments

  1. Tfinch28 says:

    Hello, OT here.

    Had BA return flights booked Gatwick – Malta in Sep. With the move of short haul to LHR, I have had an update to my booking. Inbound has switched to LHR, but my outbound has just been cancelled and not replaced with anything. Is this something standard or am I missing a step? I don’t want to agree to the change incase I then need to book and pay for another outbound despite no mention of a refund for the completely cancelled outbound leg. Our aim is still to travel. Any advice appreciated. I imagine it’s just an error that will need a phone call? Wanted to ask here before sitting in the queues! Cheers.

  2. Looking at the Accor brand information it seems that a breakfast room (plus vending machine) is the minimum catering required for any of the brands including Ibis Budget.

    A lot of Travelodges do not have any sit in catering, nor do they have an easy way to add it without extensive construction work and the loss of rooms.

    Will Accor be willing to add confusion to the Ibis Budget offering by adding hotels without catering. The Ibis brand is already confusing with its 3 sub-brands with different included amenities and loyalty scheme membership.

    https://group.accor.com/en/hotel-development/brands/our-brands-portfolio

    • The landlords will end up funding capital works I reckon, although Accor seems to be covering soft costs like new beds.

    • A couple of people on FT suggesting that maybe Accor should create a new Ibis subbrand below Ibis Budget 🙂

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