Travelodge owners to target billion-pound sale?

City sources are predicting Travelodge is being lined up for a sale by owners Goldman Sachs, Avenue Capital and GoldenTree Asset Management. It is a sale which could net them £1bn-plus. Should a sale go through, it would be quite a turn around, three years after the brand was rescued from the brink of collapse.

With the value hotel market soaring, Travelodge is set to unveil a 63% jump in underlying earnings last year to over £66m from revenues up 14.9%. RevPAR is also up 16.8% as occupancy and room rates both improved.

Dubai International Capital divested itself of Travelodge in 2012 when the brand had borrowings of £1bn.

A £100m investment programme and the letting go of 48 unprofitable leases helped turn the situation around, with the brand, which has 501 hotels in the UK, now on the expansion trail.
Analysts also say that Travelodge’s main rival, Premier Inn, has moved upmarket creating price gap between the brands: An average of £59 (Premier Inn) to £45 (Travelodge).

Peter Gowers, Traveledge chief executive has not ruled out a sale of the chain. He was quoted in The Times, when asked about the owners’ intentions: “They’ve said themselves they are not natural long-term holders, but that’s a subject for them.”

One City source told CN the proposed sale could be seen as another sign of a strong bounce back in what has fast become a ‘post-recession boom’, with fortune favouring those brave enough to buy a broken brand at the bottom of the cycle.
 
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Paul Colston

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Paul Colston

Managing Editor, Conference News & Conference & Meetings World.

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