Whitbread could lose out in bid for Travelodge

Whitbread's bid for the Travelodge budget hotel chain is likely to fail, insiders admitted this week.

Although the group has been identified as one of the bidders for the business, it is likely to lose out as it is unwilling to pay a high price for Travelodge. This is because it would convert the Travelodges into Travel Inns and would not therefore be interested in paying extra cash just for the Travelodge name.

It now seems more likely that venture capitalists will put in the top bid for the Travelodge chain. Those involved with the deal said that financial buyers and venture capitalists were "looking very promising" and that the Whitbread bid would probably come in too low.

Venture capitalists such as Candover, Cinven, 3i and CVC have all been cited as possible buyers.

The Whitbread bid is further complicated because if it were successful in buying the 220 Travelodge hotels it might be subject to an inquiry from the Office of Fair Trading over allegations of a monopoly, as it would increase the number of hotels in its portfolio to more than 400.

Other hotel operators understood to be interested include Accor, Six Continents and Scottish & Newcastle.

Compass has reportedly had more than 70 expressions of interest in the Travelodge and Little Chef businesses, which it put up for sale in June.

The two businesses are together valued at between £600m and £1b.

by Samantha McClary