Travelodge is asking landlords to take a blow of up to £146m to their rent bills over the next two years, as part of its measures to recover from the impact of coronavirus.
In a letter sent to landlords today and seen by EG, Travelodge has asked landlords to waive £103m to £146m in rent under its recovery plan. This equals around 2.4% to 3.3% of more than £4bn in rent due over the remainder of its leases.
The hotel chain explained in the letter that it expected to lose £350m in sales this year as a result of the pandemic, and that it would take the hotel sector “several years” to recover to 2019 levels. It cited findings from economic commentators and hotel analysts showing that 2020 hotel revenues could be impacted by around 50%.
The chain has proposed moving to monthly payments rather quarterly until the end of 2021, with reduced sums for some landlords. After this period, it said it expects to return to the full level of contracted rent payments at the end of next year.
In exchange for this, all landlords asked to accept reduced rents will be offered lease extensions for a period equivalent in value to the amount of rent foregone, as well as an additional further year.
Travelodge has also proposed a mechanism to ensure that landlords can receive an additional payment, if it outperforms a baseline level of profitability over that period.
Under the recovery plan, Travelodge’s shareholders are expected to write down their equity value by around £200m, given an extra £100m in debt facilities that the company has taken on as well as its use of cash reserves.
Travelodge declined to comment.
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