Dozens of Travelodge landlords are set to ditch the budget hotel chain to set up a rival company, following an acrimonious battle with the firm over rent cuts during the pandemic.
Around 80 hotels will desert Travelodge to sign new leases with Goodnight, a new brand set to be formally announced later today.
The Goodnight brand will launch in January next year in conjunction with management partner Village Hotels, which owns hotels in 31 locations around the UK.
Travelodge slammed the move, saying that sticking with it “remains the best choice for landlords”.
A spokesperson for Travelodge told City A.M: “Travelodge delivered class-leading results for the five years prior to the Covid-19 crisis and we are confident that it will return to that strong performance in the future.
“With a covenant strengthened by its new funding arrangements it remains the best choice for landlords looking to the long-term prospects to benefit from the trends for low-cost budget hotels across the UK.”
The move, first reported by the Telegraph, follows a bitter dispute between Travelodge and the owners of its hotel sites after the budget hotel chain tried to force them to accept rent cuts of more than £140m during the pandemic.
The hotel chain, owned by hedge funds Goldentree, Avenue Capital and Goldman Sachs, also proposed rent reductions until 2021.
The Travelodge Owners Action Group, which represents owners of more than 400 of the chain’s 580 hotels, in May threatened to block the rent cuts and set up a rival company, dubbed Travelodge 2.0.
The hotel firm has hired accountant Deloitte to oversee a company voluntary arrangement (CVA) with creditors in a bid to break the impasse and save the chain’s 10,000 staff.
A further £100m was raised from debt markets, and the beleaguered hotel chain’s owners pledged to inject fresh capital into the firm.
Travelodge, which was forced to shut its 564 hotels at the start of lockdown in March, withheld a quarterly rent bill due that month.
The move infuriated landlords, who lambasted the “aggressive approach” of Travelodge’s owners.
Landlords have until mid-November to walk away from new rent terms agreed under the CVA.
Goodnight advisers are said to have been swamped with interest from landlords in recent weeks as the new company looks to sign up 200 hotels to add to its portfolio.