Search
The Caterer

Travelodge to undertake a CVA

03 June 2020 by
Travelodge to undertake a CVA

Budget hotel chain Travelodge is undertaking a Company Voluntary Arrangement (CVA) after months of negotiations with landlords.

Shareholders are supporting the business with the use of more than £100m in reserves, taking on £100m in extra debt and putting in up to £40m in new equity The group is expected to launch the CVA today, which is hoped to save the jobs of 10,000 people, secure the long-term future of the company and will not involve any hotels being permanently closed.

The business is understood to have taken a £350m hit to sales following the outbreak of Covid-19 in the UK and the government-enforced closure of hotels except for the accommodation of key workers, with the CVA left as "the only option" after negotiations that have seen legal action and threats of eviction.

The proposals are expected to include around 94% of the group's leases receiving at least 50% of rent through to the end of 2021, a step up from previous proposals, while 6% (37) of leases that are loss-making and are likely to be loss-making for some time (such as airport hotels) will receive no rent until this time but will be paid all fixed charges. All hotels will then return to full rent from the end of 2021.

To help mitigate the rent foregone, Travelodge is giving landlords the option to add on an extra term to their lease of at least the same value (three to five years) and landlords will also get a 50% share of any earnings (EBITDA) above £200m over the next three years.

Travelodge landlords 'threaten to block rent cuts and establish new operator' >>

Continue reading

You need to create an account to read this article. It's free and only requires a few basic details.

Already subscribed?

The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.

close

Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.