Travelodge Launching lb100mil Fund to Buy Stricken Hotels
JUNE 18, 2009 - Travelodge is launching a lb100 million fund to snap up the growing number of distressed hotels that are coming up for grabs in the economic downturn.
The move comes shortly after its arch rival Whitbread, which owns the Premier Inn chain, warned of significant industry restructuring.
Whitbread and Travelodge are among the few hotel groups that continue to seek acquisitions as weaker rivals retrench. However Whitbread is trying to use its cash reserves to fund deals, whereas Travelodge has teamed up with Meghraj, an Anglo-Indian property fund manager, to raise funding.
The new Tamesis Capital will seek to raise lb40 million of equity and lb60 million of debt with a view to acquiring up to 14 hotels that would then be converted and leased by Travelodge.
Paul Harvey, managing director of development at Travelodge, said that despite the downturn, he was confident of raising funds.
"We have tested the water and believe there will be an appetite for this," he said.
He said the move to establish a fund followed evidence that price expectations from owners and administrators were slackening. He cited the example of three hotels acquired from the administrators of the Real Hotel Company, where the landlords had agreed to a 20 per cent rent cut.
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