Travelodge bosses have said they will be able to steer through the coronavirus crisis after landlords backed a plan that will knock millions off the company’s rent bill.
In a vote on the company’s future on Friday, creditors gave the thumbs-up to a proposed company voluntary arrangement.
The deal will likely save the firm around £144 million in rent.
“The creditors of Travelodge have today approved its proposed company voluntary arrangement (CVA),” the company said in a statement.
“The successful vote will enable Travelodge to navigate the short-term challenges facing the business as a result of the Covid-19 pandemic.
“The directors of Travelodge would like to thank its creditors for their support during this period and look forward to reopening and welcoming guests back to its hotels in the near future. ”
The proposal was revealed earlier this month as Travelodge tried to find a way to hold onto the 10,000 staff it employs and the 584 hotels it runs.
All the sites closed in late March when a lockdown was enforced across the UK, a particular blow for a company that makes 70% of its profits between April and September.
The outbreak is expected to cost Travelodge around £350 million.
Tense discussions ensued with landlords. The owners of the sites accused Travelodge of trying to cut its debts at their expense by refusing to pay them for the three months to March.
The deal will see Travelodge pay £230 million in rent until the end of 2021, 62% of its usual levels.
“The CVA proposal was a critical part of Travelodge’s recovery plan to manage the current Covid-19 pandemic and today’s approval will ensure the company can manage its operations in the short-term as well as help position the business for success in the long-term,” a spokesman for the hotel chain said.
According to real estate adviser Altus Group, Travelodge will save £35 million this financial year after the Government slashed business rates.