Landlords say ‘Goodnight’ to Travelodge in Covid row

Linda J. Dodson

Dozens of Travelodge landlords are set to desert the budget hotel chain, setting up a rival operator called Goodnight.

In a big blow to Travelodge’s hedge fund owners, 80 hotels will sign new leases with Good Night, The Telegraph can reveal.

The Goodnight brand, due to be formally announced later on Friday, will launch on January 1 next year in conjunction with management partner Village Hotels.

Industry sources said most landlords will revert to pre-Covid terms, although some loss-making sites will need to renegotiate terms.

The move follows an acrimonious battle between Travelodge and the owners of its hotel sites following the coronavirus lockdown. 

More than 90pc of landlords have had their rents cut in half until the end of next year under a radical restructuring rammed through the courts in June.

Some owners will receive no payments before the end of 2021 under the company voluntary arrangement (CVA).

Landlords were forced to accept rent cuts of more than £140m or leave Travelodge no choice but to call in administrators. A further £100m was raised from the debt markets and its owners pledged to inject fresh capital.

Owned by US funds GoldenTree and Avenue Capital and Wall Street investment bank Goldman Sachs, Travelodge shut its 564 hotels on March 24 when the lockdown began.

The budget hotel chain withheld a quarterly rent bill that was due in March, angering property owners, many of whom were still battle-scarred from a similar restructuring in 2012 that forced them to accept steep rent cuts.

Many landlords were infuriated by the move because they feel distressed fund owners used Covid to secure more favourable terms and should be injecting more of their own cash into the business.

Sources said it was the “aggressive approach” of Travelodge’s owners that had prompted landlords to break their leases and forge out on their own.

Landlords have the option until mid-November to walk away from the rent terms agreed under the CVA.

“This has the potential to completely decimate their [Travelodge’s] business,” said one deal insider.

Advisers to Goodnight are said to have been inundated with interest from landlords in recent weeks and have an aspiration of signing up 200 hotels.

Travelodge has been approached for comment.

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