Travelodge Serves Up a Restructuring Plan for Breakfast

Posted on Jun 04, 2020. by NTI

On Wednesday (3 June) the budget hotel group Travelodge, who claim to offer flexible rates and great value hotels across the country, offered its latest hotel deal to some of its landlords by filing for a CVA to secure £144 million worth of rent cuts (it is not clear if this came with or without breakfast and a diminutive kettle in the room). Talks between the company's owners and landlords have been described as "fraught" during the period of the Covid-19 crisis, which has heralded a period of complete closure of the company's business and the claim of a loss of £350 million in revenue. The company, whose backers include Goldman Sachs, has refused to pay its landlords for the three months to March as a result.

However, just as with the Restaurant Group (also a subject of an NTI app news bulletin today), claims have been made by landlords that cuts have been made, using the pandemic as an excuse at their expense. This is an argument that is easy to understand when realising that proposed payments to landlords will be just half its usual annual bill, at £230 million. Travelodge will also save more than £35 million this financial year due to the Government’s business rate holiday, according to real estate adviser Altus Group.

It has been claimed that there has been a "failure to engage" with hotel owners and Viv Watts, who represents the group of over 150 landlords, said, “The latest plan appears to be an attempt to force through Travelodge’s original unjust proposal under the guise of a ‘non-traditional’ CVA, designed to enrich its offshore shareholders at the expense of UK savers and investors". So, the argument continues that tenants are deliberately focusing their attention on massive restructuring at a time of national crisis, not least because the group's landlords say they are baffled by why a Company Voluntary Arrangement was required in the circumstances and the action taken was, to say the least, precipitous. This one will go on and on ...

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