Travelodge has acquired 52 budget hotels from restaurant and pub operator Mitchells & Butlers for £91m, boosting its estate to 452 UK properties.
The deal, carried out through property investment company Prupim, sees Travelodge sign a 25 year lease on the properties currently operated under the Innkeeper’s Lodge brand, making it the largest transaction in the UK hotel sector since 2008.
The budget hotel chain will now invest £10m in a refurbishment programme to fully launch all 52 properties under the Travelodge brand within four months. This would see Travelodge replace all beds while building new reception areas and redecorating the interior.
All 430 existing Innkeeper’s Lodge staff will be retained, with Travelodge seeking to recruit a further 25 hotel managers and 90 hotel staff.
Rapid Travelodge growth
Grant Hearn, executive chairman of Travelodge, said: “This innovative deal represents the whole of last year’s growth in one move and highlights Travelodge’s excellent position coming out of the recession. We have an aggressive growth plan in place and with this acquisition we are on track to more than double the size of Travelodge hotels over the next ten years.
"We hope to explore further opportunities like this deal with other similar businesses.”
M&B focus on food-led brands
As part of the deal, M&B have sold and leased-back eight restaurants and pubs attached to the hotels for £16m. They will now work together with Travelodge to drive trade across both businesses.
Adam Fowle, chief executive of M&B, said: “This transaction is in line with our strategy of disposing of the non core assets and focusing the business on expanding the number of sites of our market-leading restaurant and pub brands which have significant growth potential.”
So far 44 sites have been exchanged with Prupim, with the remainder due for completion on 10 August 2010. M&B will then continue to operate around 750 rooms within its estate, the vast majority being above restaurants and pubs that will continue to trade under the Innkeeper's Lodge brand name.
Travelodge recently unveiled its 400th property at London Waterloo as part of its 25th anniversary celebrations.
To watch BigHospitality’s exclusive video interview with Travelodge’s newly appointed chief executive Guy Parsons, click here.