The deadline for landlords to decide whether to stick with Travelodge (U.K.) or jump ship is 18 November, and alternative platforms, operators and owners are making noise and claiming agreements with dis-satisfied parties
The first potential change from landlord antipathy to the recently proposed Travelodge (United Kingdom) reorganization is set to appear in November, but noise already has begun, according to sources.
Following a U.K. court ruling that the firm’s CVA, centered on a rent-payment deduction of 38%, constituted a break of clause, rival hotel firms have been scouring Travelodge’s U.K. portfolio for potential add-ons.
The hard deadline for landlords to decide to leave their contracts with Travelodge is 18 November.
Investors in that platform—NP Investment Management, Sherman Financial Group and Grand Heritage Hotels—have ended discussions on the possible acquisition of 119 Travelodge hotels from U.K. real estate investment trust Secure Income, the largest Travelodge owner by asset number, CoStar News reports.
The problems started when Travelodge proposed in early summer a new arrangement called a Company Voluntary Arrangement, which landlords viewed as benefitting shareholders, not landlords.
Travelodge said reduced demand due to COVID-19 required it to reduce its rent load, but sources said even if the firm manages to weed out hotels it no longer wants, any percentage less in rent would not equal a reduction in debt.
“For Travelodge, I do not think it matters if none or 300 properties go. It has more debt now, and it is not carrying our rent reviews in 2020 or 2021, so when they are in January 2022, 200 or more rent reviews will all come into force at the same time,” said Viv Watts, managing partner of Oasis Holding, which owns two Travelodge properties.
“I would have thought (Travelodge) would have used the opportunity of this year to step back and take the emotion out of picture,” said Watts, who also set up the Travelodge Owners Action Group.
One of the U.K.’s two budget giants, Travelodge is owned by Goldman Sachs, GoldenTree Asset Management and Avenue Capital, was founded in 1985 and has 592 hotels, most of them in the U.K.
SOURCE: HOTEL NEWS NOW
