UK budget hotel brand Travelodge is set to enhance its footprint with the acquisition of 66 Travelodge-branded hotels from its largest landlord, LXi REIT, in a £210m ($267m) deal.
The move is backed by GoldenTree Asset Management, the owner of Travelodge, and comes as part of the company's strategic efforts to optimise its hotel portfolio and diversify its freehold/leasehold split for added value.
The acquisition will completed by 28 February 2024 and is funded through a combination of shareholder investment, third-party financing and cash from Travelodge.
Strategic acquisition for enhanced control and growth
The 66 hotels, located in areas including London, the Midlands and the North of England, will be acquired on a freehold and long leasehold basis.
The strategic move allows the Travelodge group to gain greater control over the assets, fostering value enhancement.
The acquisition will be facilitated through a newly created property holding group established under a new Travelodge group holding company, with support from GoldenTree Asset Management.
Record Q3 sets the stage
The acquisition follows Travelodge's Q3 results in November 2023, showcasing a 16.7% increase in revenue to £782m ($994m) and a 22.4% rise in underlying earnings (adjusted earnings before interest, taxes, depreciation and amortisation) to £201.2m.
The company's Q3 financial performance positions it for continued growth and re-inforces its commitment to excellence in budget accommodation.
Future growth plans and partnership continuity
Looking ahead, Travelodge plans to explore additional freehold opportunities to further diversify its asset base.
The company expressed excitement about its ongoing collaboration with LXi REIT, its largest landlord, and looks forward to the continued working relationship.
“We are pleased to announce this transaction with LXi, with whom we have enjoyed a strong working relationship over many years. We look forward to continuing to work with LXi, which remains our largest landlord, with the 69 Travelodge hotels they continue to own,” said Travelodge chief executive Jo Boydell in a statement.
Simon Lee, CEO of LXI REIT Advisors, highlighted the significance of the landmark sale, emphasising Travelodge's best-in-class operations.
“Travelodge operates a best-in-class hotel business and the firm commitment of its owners to the business is demonstrated by their support to enable the purchase of 66 of its assets.”
