The chain, which is one of the UK’s most popular roadside overnight accommodation venues, is slowly sinking under a mountain of debt which is threatening the very future of the company.
There are currently around 5,000 hotels in the group which employ 6,000 staff and a number of options are being considered to reduce the amount of debt, which currently stands at around £500 million.
Travelodge has not been a victim of the economic downturn and has in fact seen its turnover rise, with a 20% hike in profits. However, the interest on what it owes has reached crippling levels and the group can no longer afford to carry out planned renovations. Interest payments alone are believed to be around £100 million per year, against an operating profit of £55 million.
One of the options being considered is a sell-off of around 50 of its hotels, but the success of this would depend on being able to find new operators to transfer the existing lease to. Any staff employed at the sites would not face redundancy, but would, instead, be transferred as part of the deal.
A CVA is another possibility currently under consideration. If this were to be agreed, creditors would agree to slash the outstanding balance and may mean Travelodge is able to renegotiate the terms of any leases which have proven to be uneconomical.
Specialist accountancy firm, KPMG, have been appointed by the impending new owners. A spokesman for Travelodge confirmed that ‘no decisions’ have been reached yet, but as ‘part of the ongoing restructuring process,’ several alternatives were being considered.