The UK Budget Hotel Chain Battles—Hotel Giants Vie for the Spot
Despite the current status of the world, global hotel companies find themselves in a fierce battle, with negotiations happening between the leading ownership group of...
- Aug 8, 2020
Despite the current status of the world, global hotel companies find themselves in a fierce battle, with negotiations happening between the leading ownership group of the UK-based chain for a needed change in affiliation. Although talks remain to be ongoing, a deal arising will earn the title as the first major hotel transaction, especially since the travel industry is currently suffering from COVID-19.
The hotel chain in question is the Travelodge Owners Action Group, which is an organisation representing the landlords of Travelodge hotels in the UK. The current negotiations are tense, to say the least, especially since hundreds of thousands of hotels from across the have suspended operations. In the UK alone, hoteliers have only been able to re-open last July 4, after months of no pay, no business.
Due to revenue loss, the hotel company is now in a hot seat, especially after failing to pay quarterly rent due. While the reduction of rent has been agreed upon, landlords now wish to work on looking for a new operator, hence the current battle of negotiations. Some of the hotels in the conversation equation are IHG, Magnuson Hotels, Oyo, also including the giants Marriott, Hilton, and Accor.
What does this all mean for the future of Travelodge?
While the Travelodge landlords continue to look for a more stable hotel operator, experts find that the current situation to be rather unnecessary. While the deal coming out of the negotiations will indeed be the first major transaction since the pandemic disaster struck, many people note that the organisation has the capacity to recover post-COVID-19, especially since lending will become available once more.
“The Travelodge landlord situation is an economically tragic situation, where the landlords are not being allowed to capitalize on their end of the deal even though—from what we understand — the company does have the resources to pay the rent,” Thomas Magnuson says, the Magnuson Hotels CEO.
They further argue that Travelodge landlords need to view the current situation as a commodity—if dealt with patience and more sound decisions, the business will continue to go around. That’s how it works in the business world, and the current negotiations may just be hurting what’s to be a bright future for the company.
A ticking time bomb
Unfortunately, only five months remain before negotiations become final, and deals are made. There is a lot of discussion that still needs to be done, both within the Travelodge company and the other global companies vying for the spot. With such a tight situation, many those involved have half the mind to leave the hotel business altogether, especially since the pandemic has struck the industry in ways the world has never seen before. With over 400 properties in question, the company needs new and better agreements, all of which need to be done before November comes around.
With a virus spread and potential economic disasters to worry about, five months may not be ample time to decide a conglomerate’s future—however, the semblance of control may just be what they need. Until then, the battle wages on and the spot remains yet to be claimed.
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