Grant Hearn, who has announced that he is stepping down as chief executive of Travelodge after 10 years with the company, has told Caterer and Hotelkeeper that he intends to pursue another major role within the hotel or leisure industries.
One of the most influential figures in the development of the budget hotel sector in the UK, Hearn has announced that he is leaving Travelodge a year after overseeing a change in ownership of the company from Dubai International Capital to Avenue Capital, GoldenTree Asset Management and Goldman Sach. The new owners agreed to underwrite the £60m required to prevent the business defaulting on its loans of £528m.
Soon after, Travelodge was placed into a company voluntary arrangement (CVA) which saw the debt reduced to £329m and the off-loading of 49 leasehold properties.
The CVA also resulted in the provision of £57m for the refurbishment of the portfolio of 521 properties in the UK, including 11 in Ireland and six in Spain.
Hearn initially made an impact on the budget hotel sector when he became managing director of Whitbread's budget group Travel Inn (now the largest brand in the sector with more than 600 properties) in 1996. He left the company in 2000 to become managing director for the UK & Ireland of Hilton International, returning to the budget sector in 2003 as chief executive of Travelodge, which then had 203 hotels.
Hearn said that he is proud of growing the company which was originally founded by his cousin Alan Hearn on behalf of Forte in 1985.
"It has also been a real privilege to lead the Travelodge team and help grow the careers of some exceptionally talented people," he said.
"I wouldn't be leaving the company unless I was confident that it was in a strong position to move forward again and be in a position to grow. We need to ensure everything is operating well in the UK, but within five years I expect the company will be ready to rekindle thoughts of expanding into the rest of Europe."
Graeme Smith, head of the hospitality sector at Zolfo Cooper Corporate Finance said that Hearn is leaving Travelodge on a far more stable footing than before the CVA, having steered it through turbulent times
"Travelodge is now well placed for the next person to take the business forward," he expalined. "Financial pressures often lead to investment in hotel assets being cut back and Travelodge is clearly trying to rectify this through its refurbishment programme. This process will take time though, with an estate the size of Travelodge's.
"The key focus for the new chief executive will be to renew a focus on the development of the brand and also the continued growth of and investment in the estate. In the short-term, Travelodge will still dominate the hotel development market in the UK, along with Premier Inn, due to its budget positioning and leasehold operating structure, which are both favourites of the development finance community.
"In the longer term it will need to respond to a growth in competition in the budget sector (Z Hotels, Tune, Citizen M, Motel One) and also new developments in the compact budget sector such as "hub by Premier Inn" and "Moxy" from Marriott and IKEA."
Hearn, who will remain with Travelodge until his successor is appointed, intends to pursue another major role within the hotel or leisure industries. "It won't be within the budget sector - I wouldn't want to compete with the exceptionally strong team at Travelodge," he said.