Hotel group Travelodge has found new operators for the bulk of the 49 venues it sought to offload in the wake of last year’s rescue deal, but it is still to secure a future for the remaining 11 establishments.
The firm, which operates more than 500 hotels across the UK, Ireland and Spain, said its site at Edinburgh’s Shandwick Place has been bought by industry newcomer Sleeperz, while its Belford Road venue in the city’s west end will be run by a new operator.
Two hotels, in Ayr and Kilmarnock, will be taken on by individual franchisees but will be operated and managed by Travelodge.
In total, 13 hotels have transferred to individual operators while Moto, the motorway services specialist, has signed a franchise contract for seven sites.
Under the terms of the franchise deals, the new owners will be responsible for revamping the properties in line with the group’s £57 million refurbishment programme, which launched last month.
Chief executive Grant Hearn said the overhaul was making good progress and initial feedback from customers had been “fantastic”.
He added: “By autumn 2014, almost 90 per cent of Travelodge’s estate will incorporate the new room design. This equates to an average of more than 50 rooms being refurbished every single day for the next 18 months.”
In addition, 18 hotels and the “majority” of staff have been transferred to a range of new operators, including Best Western, Ibis and Metro Inns.
Hearn said the group would continue to work with the landlords of the remaining 11 hotels to find suitable new operators. In the meantime, these establishments will continue to operate under the Travelodge brand.
He added: “It is great news that we have been able to find new operators and introduce franchise contracts for the majority of these hotels.
“We were always confident that we would secure a future for these properties and the deals that have taken place just demonstrate the huge strength of the Travelodge brand.”
Last year’s company voluntary arrangement had been criticised because landlords were asked to accept a rent reduction, but the deal meant creditors secured 23.4p in the pound – they had been warned they would see a return of just 0.2p in the pound if the company was placed into administration. Under the terms of its wider rescue deal, the chain was able to shake off some of the mammoth debts it inherited from former private equity owners.
The company’s three main lenders – Goldman Sachs and two US hedge funds, Avenue Capital and GoldenTree Asset Management – took control of Travelodge from Dubai International Capital, which paid £675m for the firm in 2006.