Published on Wednesday, June 3, 2020
Budget hotel chain Travelodge is to file for a form of bankruptcy after losing £350 million of sales due to the lockdown.
It said that it has no option but to apply for a Company Voluntary Arrangement to save 10,000 jobs and secure its long-term future.
A CVA allows an insolvent company to continue trading and gives it a fixed period to pay its creditors.
Travelodge is asking landlords to accept a 38% rent cut on its 564 hotel portfolio until December 2021, after which it has promised full rents will be paid.
Under its proposal, about 94% of its landlords will receive at least 50% of their rent until the end of next year, but 37 leases (6% of the total), including some loss-making airport hotels, will receive no rent until 2022.
To try to persuade landlords to accept the CVA, Travelodge is offering them a 50% share of any profit above £200 million over the next three years. In the last three years, it made at least £300 million.
Travelodge shareholders have agreed to take on a further £100 million in debt and pump in an additional £40 million in new equity.
All Travelodge's hotels have been closed since March 24 and aren't expected to reopen until July 4 at the earliest. In a normal year, the company would make 70% of its profit between April and September.
It expects its profits to be halved this year, losing £350 million, which is the equivalent of 18 months' rent.
The hotel chain said that if its creditors accept its CVA, it doesn't plan to permanently close any of its properties.
A creditors' meeting will be held on June 19. Holders of three-quarters of its debt must agree to the CVA or Travelodge could face voluntary liquidation.
EasyJet urges customers to return to UK as it axes flights
More countries block passenger flights from the UK
Sandals' founder and Chairman Gordon 'Butch' Stewart has died
Ryanair warns it may axe all UK flights from the end of January
Best and worst airlines for Covid response named and shamed
Travel ban to be extended to millions more in England
Ski operator Alpine Elements to relaunch after calling in administrators
What is GoodtoGo?
Submit your news
or special offer
Current Asia/Pacific Special Edition
Destination Marketing Campaigns explained by Brightons 'Never Normal' Team
Sri Lanka 2021 - its the place to be
Patricia Rossello CEO of Roibos Technology talks through thier Hotel Distribution Marketplace
Chris Lee of Thailand Tourism talks about the plans for 2021
Air Transat launch direct booking portal for the UK trade
You can book now your advertisement for via our online booking service or find out more.
Post your comment
Your Comments
NOTE: Comments are subject to admin approval before being posted.