Travelodge agrees financial restructuring and initiates a Company Voluntary Arrangement
Travelodge (The Company), the UK's leading budget hotel company, is pleased to announce that it has agreed a financial restructuring, which will secure the long-term future of the business. This will be undertaken in conjunction with a Company Voluntary Arrangement (CVA), which was launched today and will reduce levels of rent at certain sites.
Travelodge has worked hard alongside its three key investors, GoldenTree Asset Management, Avenue Capital Group and Goldman Sachs, to reach agreement on its financial restructuring and believes that it provides further stability to the business and demonstrates confidence in the Company.
The key terms of the financial restructuring are as follows:
- At least £75m of new money to be injected into the Company
- £55m will be invested into a major refurbishment programme across the estate covering over 11,000 rooms and 175 hotels. The refurbishment programme will commence in early 2013 and continue through to summer 2014
- Bank debt of £235m will be written off and £71m repaid, reducing total bank debt from £635m to £329m.
- Repayment date of the remaining debt extended to 2017 and cash pay interest reduced significantly to a rate of 0.25% above LIBOR through to the end of 2014 In connection with the financial restructuring, Travelodge has initiated a CVA.
KPMG is supervising the CVA process and will be leading discussions with the landlords. The CVA is expected to take approximately 17 days to complete. Other than certain landlords, the CVA will not impact any other party associated with Travelodge. There will be no impact on the operational running of the business, all of Travelodge's hotels will continue to operate normally, all suppliers will continue to be paid as normal and customers will experience no changes to bookings.
Under the terms of the proposed CVA:
- The vast majority of hotels (347 hotels and 70% of the estate) will be untouched and 109 hotels (22% of the estate) will remain part of the business going forward but will be subject to a rent reduction following completion of the CVA
- Unfortunately, following a full assessment, Travelodge has found that it is no longer viable to operate 49 hotels (8% of the estate). The Company will work closely with the landlords to identify new operators for these hotels and currently envisages no hotel closures or job losses.
Commenting on today's announcement, Grant Hearn, CEO, said:
"The financial restructuring, including the CVA, will leave Travelodge in a much stronger position going forward and will ensure a long-term, sustainable future for the business. Once this joint process is completed, Travelodge's debt, interest costs and lease liabilities will be significantly reduced. This new appropriate level will provide greater security for our staff, suppliers, landlords and developers. This is a successful brand with millions of customers and the Company will emerge in excellent shape from this process."
A spokesperson from GoldenTree Asset Management, said:
"We are pleased to have agreed upon a financial restructuring for this business. Travelodge is an excellent company with great management and employees, and this action will secure the future of the Company for the long-term."
A spokesperson from Avenue Capital Group, added:
"We believe that this financial restructuring, along with the CVA process, will enable Travelodge to emerge as a stronger business and to take advantage of the great opportunities available to it as the UK's leading budget hotel operator."
About Travelodge
Founded in 1985, Travelodge is Britain's very first budget hotel chain and today is one of the largest budget hotel chains in the UK, with a portfolio of over 600 hotels and over 47,000 bedrooms across the UK, Ireland and Spain.
In Spain, Travelodge has an established profitable presence and as of April 2024, its portfolio doubled to 12 hotels, having recently acquired a further six properties. Travelodge has ambitious growth plans within this market and has identified the top 20 key locations where it would like to open additional hotels in Spain.
Welcoming over 22 million guests annually across the UK, Ireland and Spain, the majority of Travelodge hotels are located in major cities, towns and holiday hotspots as well as by airports and key business hubs. With 90% of its hotels rated 4* or above on TripAdvisor, Travelodge is proud to offer guests across its diverse customer base a good value experience – whether they are travelling for business or leisure. In 2023, approximately 50% of rooms were sold for less than £60.
Whether out celebrating a birthday, going to a concert or sporting event, visiting friends and family, taking a business trip, working away from home, or taking a short break, we help people to go and do their thing by Being the Brilliant Base.
Travelodge continues to invest in its ongoing hotel refit programme which is expected to see 50% of the Travelodge room estate upgraded to its new design by the end of 2024. The brand is also continually evolving its quality offering to deliver a better experience for its diverse mix of business and leisure guests such as its new look Bar Cafe design, 85 Bar Café, which has been rolled out to selected UK hotels as part of the refit programme.
Travelodge is focussing on its environmental and social impact, with sustainability integral to its business strategy. It's Better Future sustainability plan aims to build a more sustainable future for its customers, colleagues and the planet, and it is underpinned by three core pillars: Inclusive – ensuring we are accessible, inclusive and well-priced to our customers and colleagues; Caring – creating a caring and healthy environment for our colleagues and customers and ensuring their wellbeing; and Conscious – Travelodge is conscious of its impact on the planet, taking into account the waste it produces, the energy and other resources it consumes and the carbon emissions it generates.
For further information visit travelodge.co.uk or the Travelodge Hotels Limited LinkedIn page.