Council could lose out following Travelodge rent deal

David Grantham, 10 July 2020

Travelodge, Warwick Quadrant, London Road, Redhill (photo: Google)


Reigate & Banstead Borough Council could lose out on £300,000 in rent from Travelodge this financial year following a deal agreed in June by the hotel chain and its landlords.

The borough council owns the Travelodge site in the Warwick Quadrant development in the centre of Redhill.  The hotel opened in December 2017.

Like the rest of the hospitality sector, Travelodge has been hit financially from having to close hotels during the coronavirus pandemic.

As a result, last month Travelodge proposed a Company Voluntary Arrangement (CVA) with its landlords, which they voted to approve on 19 June.

The full terms of the CVA are not public, but according to announcements from Travelodge, landlords will see varying levels of rent reduction but with some other incentives including potential profit-related payments.

There’s no public information on the specific arrangements for the Warwick Quadrant site.

A report tabled at the council’s executive committee meeting on 25 June (but apparently prepared before the landlords’ approval vote) said: “Travelodge [has] applied for a Company Voluntary Arrangement (CVA), a legally binding agreement with the company’s creditors to allow a proportion of the debts to be paid back over time, and some to be written off, typically lasting between two and five years.

“The creditors of Travelodge including the Council are opposing the application. If it is successful it could result in a shortfall in the region of £0.317m.”

A table set out within the paper gave a figure of “0” for forecast income for the site for the financial year. last week asked the council questions about the current position, and future expectations.

A council spokesperson said: “Due to commercial sensitivities we are not able to respond to the specific questions within your enquiry.

“However, we can confirm that the council will be collecting all monies due to it from Travelodge, is actively reviewing the situation and will act appropriately when making any decisions about the future of the Travelodge in Redhill.”

A spokesperson for Travelodge last week said questions should be referred to the council as they would “have all the relevant information”.

Any loss of income in respect of the Travelodge site would form only a small part of the council’s commercial property income: it expects to receive £1.6 million from its 31 other commercial/industrial sites in 2020/2021.

That figure is, in turn, only a small part of the council’s revenue.  Its website says it spends “approximately £81 million providing services to residents” with 79% coming from income, 18% from council tax and 3% from Government grant.

In a number of recent meetings the council has discussed the effect of the pandemic on its finances, including the loss of income from leisure centres and the Harlequin, and extra demands placed on it.

Councillor Tony Schofield, deputy leader and executive member for finance, told the council’s executive on 25 June: “We are in a better financial position than many other local authorities and are well-placed to respond to this challenge.”