Travelodge set to be taken over by creditors

LONDON—February 19, 2012 – (www.hospitalitybusinessnews.com) According to the Wall Street Journal, Travelodge is close to falling into the hands of its creditors as the U.K. budget hotel chain struggles under a mountain of debt taken on by owner Dubai International Capital as part of a leveraged buyout in 2006.

In 2006, Dubai International Capital LLC, a private equity company owned by the Persian Gulf emirate's government, bought Travelodge Hotels Ltd. from Permira Advisers LLP for 675 million pounds ($1.3 billion) to enter the U.K. budget-hotel market.

``The budget hotel sector is growing and, in our view, has immense potential in the U.K.,'' Dubai International Chief Executive Officer Sameer al-Ansari said in a statement at the time. ``It is a strong brand with good growth potential, and an excellent fit for DIC.''

The debt-for-equity swap that is currently being looked at will cede ownership to Golden Tree Asset Management and Avenue Capital. The current total debt at Travelodge is currently over £400 million.

Guy Parsons, CEO of Travelodge said in a statement today, “You may have read in the press that Travelodge is currently undergoing a debt restructure; this is a standard process that many big companies undertake. There is nothing to worry about; it’s business as usual for us. Our 499 hotels are trading well and we are on track to open the 41 hotels we announced at the start of this year. We opened our sixth hotel in Liverpool just a couple of days ago and we will be celebrating the opening of our 500th hotel next month.”

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