Travelodge, the hotel chain owned by GoldenTree Asset, Avenue Capital and Goldman Sachs (LON:GS), like many businesses, has been in the eye of the storm during the coronavirus lockdown and has not been able to resume normal trading. remained almost unchanged. But what sets this hotel apart is that its future may be just as troubled.
A staycation renaissance may not be enough
With stores scattered across the UK, you might think Travelodge would be in a great position to capture much of the demand for impromptu weekend getaways, and in some ways that’s true.
Scattered along major tourist destinations such as the South Coast, the Lake District, Loch Lomond and the Trossachs, Travelodges are meeting the needs of many Brits looking to get back into the summer holiday spirit amid tight restrictions. Located in a suitable location. The lockdown continues to be lifted at a slow pace.
What’s not so great is that Travelodge sites are clustered together in the city centre. Premier Inn owner Whitbread (LON:WTB) said in an announcement in early July:
“It is still early days and it is too early to draw conclusions from booking trends, especially as hotel performance has fluctuated in other countries that eased restrictions before the UK. We are seeing strong demand during the summer, but other regions and metropolitan areas, including London, remain sluggish.”
The problem here is that Travelodge has a large fleet of hotels in cities such as London, Manchester, Leicester and Liverpool, alongside hotels in a wide range of popular tourist destinations. These sites are likely to see a gradual increase in activity over the coming months, but their performance will decline as their core customer base has not returned to normal.
You might think that these hotels rely primarily on tourists and businessmen. The former group will decline as domestic travelers remain conscious of going to crowded metropolitan areas and international travelers begin to benefit from easing restrictions. The latter group of businesspeople is becoming less mobile, with many companies still not bringing employees back to the office and even fewer asking employees to travel long distances.
Goodnight Travelodge
But the second, and far bigger, reason for concern is the Telegraph’s report that the company intends to launch a rival hotel chain called Goodnight, and is set to lose “dozens” of landlords. be.
The Goodnight Chain is expected to be officially announced later on Friday, with an official launch date of January 1, 2021. The news follows a spat between the hotel’s landlord and Travelodge’s hedge fund owners over steep rent cuts, which also happened under the law in 2012. Company restructuring.
In Friday’s announcement, 80 hotels will sign new contracts with the Goodnight brand, one trade source said of the news.
“This has the potential to completely destroy their (Travelodge’s) business.”
The turmoil began when hotel chain owners withheld quarterly rent bills due in March, but landlords later said fund owners were using the pandemic to secure more favorable terms. They are protesting that they feel as if they have secured it.
Sleep becomes shallow and sleepless nights increase
Landlords have until mid-November to reject rent proposals set out in the CVA.
For now, Travelodge’s V-shaped recovery appears to remain on a rather gradual trajectory. With inner-city services still not reaching pre-pandemic pace and another rival using a similar business model arriving early next year, the long-term outlook is tentatively positive at best. should be included.
