REPORT FROM ENGLAND—Noise is growing that United Kingdom-based Travelodge soon will be sold.
The company—which was restructured in 2012—released on 20 July its first-half 2015 results to 1 July that saw a 15.2% increase in revenue per available room and an 11.4% increase in average daily rate.
Such good trading fundamentals might be the catalyst that resulted in current owners, U.S.-based Goldman Sachs and hedge funds Avenue Capital Group and GoldenTree Asset Management, tapping Deutsche Bank to advise them on a sale of the chain, which operates more than 37,000 keys in 520 hotels, mostly in the U.K. but also in Ireland and Spain.
Peter Gowers, who was brought in as CEO in November 2013, has since overseen an ongoing transformation of the company.
Gowers said in a 20 July email sent to Hotel News Now that “our shareholders are not natural long-term holders of a hotel business, and they are working with Deutsche Bank to explore their options for the future. While that takes place, we continue to focus on driving the business forward and building on the great momentum seen in our performance so far this year.”
The BBC’s “Today” radio program on 20 July (between minutes 1:22:30 to 1:25:40) pegged the potential sale or stock market float at £1 billion ($1.56 billion), before asking Gowers why the U.K. budget hotel sector, and Travelodge in particular, might be so attractive to investors.
Gowers said it was a combination of Travelodge U.K. having invested heavily in upgrading the quality of its product and the value hotel sector growing quickly on the back of two key drivers: business travel and families, both of which increasingly demand consistency.
“Back in the day, business travel was all about executives on expenses. … That’s all changed, and businesses look at travel as a cost to be managed very carefully. … It’s a structural change, not just to do with recession,” Gowers told “Today.”
Talking directly about Goldman Sachs and Travelodge U.K.’s other owners, he added: “They came into sort the company out after its restructuring in 2012, and so at some point they’ll inevitably look to move on. And with the fantastic performance of the business in the last few years, very strong results like the ones we got today, and a very big acceleration in our development,” adding that the company expects to open 45 new hotels in the next 24 months.
Goldman Sachs, Avenue Capital Group and GoldenTree Asset Management oversaw the 2012 financial restructuring of Travelodge (U.K.) out of administration that transferred ownership from Dubai International Capital, injected capital of £75 million ($117 million) and capital expenditure of £55 million ($86 million) and wrote off and repaid more than £300 million ($468 million) of debt to reduce the then outstanding debt to just a little under £330 million ($515 million).