Travelodge is embroiled in an ever increasingly bitter row following refusing to pay landlords any rent for the second three months of 2020.
Travelodge is moving itself into insolvency proceedings using a company voluntary arrangement (CVA), in an attempt to reduce its rent costs by circa 40% to the end of 2021 and save 10,000 jobs.
Where much of the disagreement between landlords and the hotelier now centres, is in the use of the CVA legal process.
The Government defines a CVA as: If your limited company is insolvent, it can use a Company Voluntary Arrangement (CVA) to pay creditors over a fixed period. If creditors agree, your limited company can continue trading.
Travelodge is not currently proposing to close any of its hotels or to axe any jobs.
The landlords are now accusing Travelodge of using the CVA process during the Covid-19 crisis as a thinly veiled excuse to realise cost reductions.
Travelodge is arguing that it will lose £350m in sales due to the lockdown and that 10,000 jobs are at risk. It says that the CVA as part of a new restructuring plan, that includes sharing with landlords part of any future profits above £200m, once business recovers. Adding that it hopes this will end the row with landlords.
The disagreement looks set to run for some time yet and landlords that collectively own 470 Travelodge properties have come together forming the ‘Travelodge Owners Action Group’.
As the rift between the parties continues to grow, so is the intensity of the tone.
Travelodge Owners Action Group is now pointing at £129m of earnings in 2019 for Travelodge, and accusing them of paying the UK government no tax on profits between 2012-17.
UK hotel group Travelodge is owned by Anchor Holdings based in Luxembourg, major investors are US investment banks and offshore hedge funds.
Travelodge Owners Action Group