American hedge fund GoldenTree is planning to divest UK-based budget hotel chain Travelodge for over £1bn ($1.25bn) as it looks to profit from the rebound in the travel industry following the Covid-19 pandemic.

GoldenTree, which acquired Travelodge in 2012, has held discussions with investment banks regarding the sale of the 595-hotel chain.

Travelodge's other two financiers, New York-based hedge firms Avenue Capital and Goldman Sachs, recently sold their holdings in the company to GoldenTree.

According to The Sunday Times, GoldenTree expects to receive a value of £1.2bn for the company.

Last year, the company recorded revenues of over £900m, four times higher than pre-pandemic levels and profits of £212.9m.

Led by chief executive Jo Boydell, Travelodge offers rooms starting under £50 per night and as part of its budget-luxe upgrade programme, the company launched its first budget luxury hotel in London Docklands in August, City A.M reported.

The company has profited from increased demand for blue-collar business travel and has further plans to build an additional 300 hotels.

Travelodge has passed through hands multiple times since hotelier Charles Forte built the first UK location in Burton upon Trent in 1985.

The chain entered the UK conglomerate Granada Group, underwent a demerger and was purchased by the private equity organisation Permira in 2003.