Travelodge recently announced that it would increase its portfolio by opening new hotels across the UK. The budget hotel chain plans to open 19 new branches in 2016 at a cost of £140m (€187m, $203.5m).
The move will create 450 new jobs and take its total branch network to 542 hotels. Peter Gowers, chief executive officer at Britain's third biggest hotel said, "These 19 new hotels mark another important step in our drive to deliver greater quality for our customers. The value hotel market continues to go from strength to strength, boosted by ever more cost-conscious businesses and the growth in independent leisure travel."
While the first new hotel will be opened at Weston-super-Mare in spring, other locations where branches will be opened include Finsbury Park, Raynes Park and Finchley in London, apart from locations in East Grinstead, Andover, Bicester, Glasgow, Kings Lynn and Stirling. However, despite opening these branches, the company's count will remain lower than its rival Premier Inn that has more than 700 hotels.
Travelodge, which has been in business for about three decades, earlier had a debt of £1bn. It was forced to seek an emergency loan from lenders to pay interest on this loan and was on the brink of a collapse in 2012. At the time, Goldman Sachs, Goldentree Asset Management and Avenue Capital came to rescue the company. The trio took over the hotel chain from Dubai International Capital in a debt-for-equity swap.
In 2013, Peter Gowers of InterContinental Hotels was hired to helm the firm and turn around its fortunes. Under his leadership, Travelodge has spent £100m in modernising about 92% of its rooms, by adding king-sized beds and giving it a new contemporary design.
The turnaround has been positive with Travelodge reporting 2014 underlying profits at £66.2m, marking a 63.4% increase on an annual basis. The average room rate too has risen to £48.19 for the period between January and July 2015, marking an 11.4% increase from 2014.
Late last year, Goldentree and Avenue decided to exit Travelodge and appointed Deutsche Bank to advise them on a £1bn sale of the company. Private equity firm Advent International, which recently sold the mental hospital chain, The Priory Group, is among several funds that have shown interest in Travelodge, which could be sold or may even be listed on the stock market, according to The Telegraph.