Rumours grow of Travelodge sell-off

Speculation is mounting that venture capitalist Permira is preparing to sell its budget hotel brand Travelodge or float it on the stock market.

Permira bought the hotel group in early 2003 along with the Little Chef roadside restaurant chain. The private equity firm offloaded its Little Chef restaurants in October 2005 and City analysts believe it is looking to dispose of its hotels.

Typically, private equity companies exit their investments within five to seven years, and options include flotation or a sale to trade buyers or financial companies.

"Permira is looking at its options but there is nothing imminent," said one City insider. "In my view, nothing is likely to happen until 2007."

Travelodge denied there were any immediate plans for disposal. Greg Dawson, director of communications at Travelodge, said: "It's a bit of New Year speculation on what could happen during the year."

Peter Joseph, of stockbrokers Peel Hunt, believes there is little appetite for a trade sale at the moment. However, two names have been linked as possible suitors: French hotel giant Accor and Whitbread, which owns Travelodge's larger rival, Premier Travel Inn.

"Accor has not got the presence in the UK and buying Travelodge would get them up to speed," said Joseph. But he suspected that an approach from Whitbread would
arouse the interest of the competition authorities. There are around 460 Premier Travel Inns and nearly 300 Travelodges.

Travelodge announced in December that it was making £20m-worth of price cuts for 2006, offering 100,000 rooms for just £10 a night and another 500,000 for just £26.

The budget hotel group plans to add around 2,500 new bedrooms each year for the next six years.

By Angela Frewin