Travelodge owner seeks to reduce €4.5bn rent bill amid Covid-19 shutdown

The owner of Travelodge -- which operates 580 hotels in Britain, Spain and Ireland -- has formally filed to get a slice of its £4bn (€4.5bn) rents bill reduced by its landlords and its debt cut by its bondholders. 

Its hotels have been shut from March amid the lockdowns in Britain, Spain, and in Ireland, although it has rented out about 40 hotels to the National Health Service workers in Britain.

Travelodge owner TVL Finance said it was part of a recovery plan to ensure the business would save cash.          

"Our landlords are being asked to forego £103m to £146m in rent, or approximately 2.4% to 3.3% of the total of more than £4bn in rent due over the remainder of the leases, through a temporary period of rent reduction through to the end of 2021, with a return to full contracted levels of rent payments thereafter," Travelodge owner TVL Finance said today. 

It issued few details on the amount it wants bondholders to cut its debt.

"While forecasting is difficult, leading economic commentators and hotel analysts expect that 2020 hotel revenues could be impacted by approximately 50% and that it could take several years for hotel revenues to recover back to 2019 levels," it said.

"The recovery plan involves a number of key components to enable the business to successfully trade through the impact of Covid-19: Continued action by the company to preserve cash flow, making use of [UK] government measures where possible, drawing down on our cash reserves, accessing new facilities and seeking a temporary period of reduced rent from some landlords," TVL said. 

Travelodge is the second largest hotel operator in Britain and has 12 hotels in Ireland, including Belfast, Dublin, Cork, and Galway.   

It has 44,200 rooms across Britain, Spain, and Ireland.