Travelodge is to be put up for sale with a price tag of more than £1bn as the owner of the budget hotel chain seeks to cash in on a post-pandemic boom in demand.
GoldenTree, the US hedge fund that took over Travelodge in 2012, has held meetings with investment banks to explore a potential sale of the chain of 595 hotels.
The move comes after Travelodge’s other two backers – the New York-based hedge funds Avenue Capital and Goldman Sachs – recently sold their stakes in the business to GoldenTree.
Travelodge, which employs 12,000 staff and competes against its larger rival Premier Inn, is benefiting from cost-conscious holidaymakers fuelling a boom in staycations after the end of the pandemic.
GoldenTree hopes to land £1.2bn for the business, City sources told the Sunday Times.
The business reported sales of more than £900m last year – a quarter more than pre-pandemic levels – and profits of £212.9m. Last year, room occupancy was higher than in 2019, before the outbreak of Covid, and the average price of a room was £64.31.
Travelodge, which offers rooms at prices starting at less than £50 a night, is run by its former finance chief, Jo Boydell, who took over from Craig Bonnar last year.
The chain has benefited from a surge in demand from what it has termed “blue collar” business travel. It has ambitions to open a further 300 hotels.
In 2015, the owners of Travelodge hired bankers to explore a potential sale or flotation of the business but decided against a sell-off.
However, there are signs that owners of assets related to the UK’s domestic holidays market are now open to selling as the fall in the value of the pound has attracted overseas buyers. Meanwhile, the pandemic and environmental concerns have led holidaymakers to stay in the UK and boost hotel revenues.
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In April, Premier Inn, which runs almost 900 hotels in the UK as well as restaurant chains including Beefeater, Bar + Block and Brewers Fayre, reported £375m in annual pre-tax profits.
Its owner, Whitbread, is exploring the potential sale of 250 pubs and restaurants as it seeks to focus on its hotel chain.
Last month, the private equity firm Brookfield put the UK holiday village chain Center Parcs up for sale. The Canadian firm, which bought the business for £2.4bn in 2015, is seeking £4bn to £5bn for Center Parcs.
