THE notorious Travelodge at Fountains roundabout in Chester is up for sale as part of a rescue deal for the troubled budget hotel chain.
After opening in summer 2010 the 160-bed Delamere Street hotel was dubbed an ‘eyesore’ by some and a ‘lost opportunity’ by Chester Civic Trust given its location on a major gateway into the city.
Now its debt-laden parent company has secured backing from creditors and landlords for a deal which involves selling 49 of its 500-plus hotels – described in the national press as poorer performing leases – including the Delamere Street operation.
The UK’s second biggest budget hotel chain behind Whitbread’s Premier Inn, it reported a 20% increase in profits last year to £55m.
But Travelodge has been dragged down by its £100m annual interest payments on debt.
The Company Voluntary Agreement (CVA), which was passed by 97% of creditors, was needed to secure a restructuring that will allow for £709m debt to be written off.
The chain’s new owners, two New York hedge funds and Goldman Sachs, are also pumping £75m of fresh equity into the business to refresh some of its older hotels.
The CVA, which will see landlords of a further 109 hotels take a 25% cut in rent, are seen as controversial and the British Property Federation (BPF) has called for a review of such arrangements.
BPF chief executive Liz Peace commented that “once again landlords are being asked to play a significant part in rescuing a business”.
But accountancy firm KPMG, which organised the CVA, said landlords at affected hotels will see a return of 23.4p in the pound compared with just 0.2p if the company is placed into administration.
Travelodge has five operations in the Chester area with other hotels opposite the amphitheatre, Mickle Trafford, Cheshire Oaks and Northop.
