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Staff fear for jobs as deadline to find Travelodge operators nears

10 January 2013 by
Staff fear for jobs as deadline to find Travelodge operators nears

Budget hotel operator Travelodge is confident that it will find new operators for 49 of its hotels within the next two months.

However, Caterer and Hotelkeeper has been contacted by staff at the affected properties who are concerned that time is running out for new operators to be found by the 16 March deadline. They are anxious that hotels will close, with extensive job losses.

"We are all very worried about our jobs in the future," said one employee. "The company is not communicating to us at all about what will happen in March."

A spokesperson for Travelodge said that the company was "confident that all 49 hotels will have new operators by 16 March. We are in constant communication with staff in the 49 hotels, and have been right throughout this process. For example, we have a dedicated and regularly updated blog for staff in the 49 hotels, and we have senior managers visiting the hotels to update staff on a regular basis." He declined to comment on whether there would be hotel closures or job losses if the deadline was not met, adding: "That is too hypothetical a scenario to consider".

The CVA was put in place after its three main investors - GoldenTree Asset Management, Avenue Capital Group and Goldman Sachs - took control of Travelodge from Dubai International Capital, following a debt-for-equity swap. Despite trading well, the company had been struggling under £635m of bank debt.

As well as off-loading the 49 hotels, the CVA also required for rent reductions to be negotiated with landlords on 109 hotels, while the remainder of the portfolio (347 hotels) would be untouched. While £75m of new money was injected into the company to help fund a £55m refurbishment programme across 175 hotels, the bank debt was reduced to £329m.

Potential new operators for the Travelodge properties include the company's main rival and largest budget hotel operator, Premier Inn, which currently has more than 600 properties across the UK. However, a spokesman for the group said that it was not looking at any of the 49 hotels.

Accor is perhaps a more likely contender as it is very vocal in its ambition to increase its portfolio of 188 hotels to 300 by 2015 (see this week's Caterer and Hotelkeeper Interview with Thomas Dubaere, Accor's managing director for the UK & Ireland). Its budget brand Ibis (made up of Ibis, Ibis Styles and Ibis Budget) has currently has a total of 76 hotels. Accor declined to comment when asked if it was considering taking on any of the Travelodge hotels.

Meanwhile, Travelodge announced the appointment this week of former Hilton executive Brian Wallace as chairman of the company.

An accountant, Wallace spent 12 years with Hilton, initially as finance director, before combining that role with deputy chief executive. He left the company in 2007 soon after its sale to Hilton Hotels Corporation in America.

Grant Hearn, chief executive of Travelodge, said he believed Wallace would be "a real asset to our company."

Travelodge to shed 49 hotels and reduce rent on 109 more as it enters CVA >>

Travelodge creditors approve CVA >>

Travelodge appoints Brian Wallace as chairman >>

By Janet Harmer

E-mail your comments to Janet Harmer here.

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