U.K.-based hotel chain Travelodge announced a £635-million ($998-million) debt restructuring that will give control of the business to lenders including U.S-based Golden Tree Asset Management, Avenue Capital Growth and investor Goldman Sachs.
The key terms of the financial restructuring are as follows:
- At least £75 million ($118 million) of new money will be injected into Travelodge.
- An investment of £55 million ($86 million) will be used for a major refurbishment program across the estate, covering more than 11,000 rooms and 175 hotels. The program will commence in early 2013 and continue to summer 2014.
- Bank debt of £235 million ($369 million) will be written off and £71 million ($112 million) repaid, reducing total bank debt from £635 million ($998 million) to £329 million ($517 million).
- The repayment date of the remaining debt extended to 2017 and cash pay interest reduced significantly to a rate of 0.25% above Libor through to the end of 2014.
In connection with the financial restructuring, Travelodge has initiated a company voluntary arrangement—a type of reorganization allowing companies to renegotiate rents and leases—with 109 hotels (22% of the estate) that will be subject to rent reductions. And another 49 hotels (8%) will be removed from the system.
The restructuring severs Travelodge’s ties with long-standing owner Dubai International Capital, which bought the company in 2006 from private-equity firm Permira for £675 million ($1.1 billion) backed by loans of £478 million ($752 million).
London hotels reported increases in average daily rate and revenue per available room during the 2012 Olympic Games, according to a news release from STR Global, sister company of HotelNewsNow.com.
Hoteliers across London reported average occupancy increases of 4.8% to 88.5% and ADR increases of 86.1% to £212.22 ($333.59) compared to the same days the year prior.
“The London 2012 Olympic Games have provided great sporting moments and a very enjoyable atmosphere for athletes and spectators alike,” Elizabeth Randall Winkle, managing director of STR Global, said in the release. “The smooth running of the event and its positive coverage to a global TV audience will encourage more visitors to come to London in the future. London’s hoteliers are looking forward to welcoming them as well as preparing to host guests for the Paralympics, held 29 August through 9 September.”
Two big industry players are sharing the spoils of a brightening hotel operating environment with their respective shareholders, writes HotelNewsNow.com’s Shawn A. Turner.
InterContinental Hotels Group and Choice Hotels International recently each announced vehicles meant to create value for shareholders. IHG is returning $1 billion to shareholders via a $500-million special dividend and a $500-million share buyback program that is scheduled to begin during the fourth quarter. IHG also upped its interim dividend by 31% to 21 cents per share, the third consecutive year the company has raised its dividend.
Choice, meanwhile, declared a special cash dividend of $10.41 per common share, or approximately $600 million. The company is funding the dividend with its recently completed $400-million notes issuance and through a senior secured credit facility.
Each company reported strong numbers during the quarter. Choice said it is driving “record traffic” to its hotels while IHG said global revenue per available room was up by 6.1% during the quarter.
STR Global on Friday released a second batch of global pipeline data—this round covering the Americas regions.
The Caribbean/Mexico hotel development pipeline comprises 132 hotels totaling 20,214 rooms, according to the July 2012 STR Construction Pipeline Report.
Among the chain-scale segments, the upscale segment represented the largest number of rooms in the total active pipeline with 23.5% and 4,756 rooms. Three other segments each accounted for 15% or more of rooms in the total active pipeline: the unaffiliated segment (23.3% with 4,715 rooms); the luxury segment (20.7% with 4,180 rooms); and the upper-midscale segment (19.6% with 3,954 rooms).
The Central/South America hotel development pipeline comprises 234 hotels totaling 32,749 rooms, according to the July 2012 STR Global Construction Pipeline Report.
Year-to-date 2012, 24 hotels with 3,952 rooms have opened in the region. For the remainder of the year, 28 properties are expected to open with 3,593 rooms. The upper-midscale segment is expecting to open the most rooms with 903 rooms in six properties, followed by the upscale segment with 738 rooms in seven properties.
On the heels of its announced partnership with MGM Resorts Hotels International to bring the Delano brand to the soon-to-be-converted THEhotel at Mandalay Bay, Morgans Hotel Group Company on Friday announced plans to extend its signature luxury brand to Russia with the opening of the Delano Moscow.
The property, slated to open in 2015, will be the group’s third international Delano, following the opening of Delano Marrakech slated for September 2012 and Delano Cesme scheduled to open in 2015.
Morgans’ Delano first opened its doors in 1995 in Miami's trendy South Beach and quickly generated buzz as a next-generation chic, urban resort.
Compiled by Jason Q. Freed and Patrick Mayock.