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Landlords are putting pressure on Travelodge to pay its rent, with claims that the budget hotel operator is “taking advantage” of the coronavirus crisis to cut bills that it can afford to pay.
According to The Financial Times, a group of 82 landlords wrote to Travelodge today (1 May), rejecting the company’s request to cut its rent bill by 50% until the end of next year.
In the letter seen by the Financial Times, landlords have said that such a move would cost them £175m.
Travelodge requested that the reduction be 80% this year and 50% next year if hotels are not able to open before 1 July. Landlords have offered to allow the company a deferment of its April-June quarterly payment and said that rent for the rest of the year could be paid monthly, however.
The group estimated that these proposals would give the budget hotel chain £53m in immediate cash relief.
Viv Watts, who owns and manages a number of Travelodge properties and is representing the landlords, told The Financial Times: “We are not their first call for a capital injection. It’s a very strong business today with a very liquid shareholder. They are playing on the fact that their portfolio is made up of individual investors.”
Travelodge currently has 135 landlords, the majority of which own one or two sites.
Nick Leslau, owner of Secure Income Reit, Travelodge’s largest landlord, described the hotel owners as “gaming the system”.
He said: “[They] are distressed debt fund owners sitting in New York . . . Their approach to the debt is very different to the [property] owners,” he said. “Travelodge is trying to take advantage of the situation to get landlords to fund their rent for the next few years.”
News of the dispute comes one week after the government outlined new measures to protect businesses from “aggressive” rent collection, asking landlords to accept what pay they can as the lockdown continues.
Whilst the majority of landlords and tenants are “working well together” to reach agreements on debt obligations, some landlords have been using aggressive debt recovery tactics, according to the government.
To end such practices, there will now be a temporary ban on the use of statutory demands and winding up orders where a company cannot pay their bills due to the pandemic.
Leslau added: “Landlord castration is the big issue. The June quarterly payment could be particularly bloody as a result.”
Hotel Owner has contacted Travelodge for comment.
