Travelodge has completed its lease re-gear with its largest landlord, LXI REIT for the majority of the properties in the 122 Travelodge hotel portfolio it acquired as part of Secure Income REIT merger in 2022.
Travelodge has negotiated new caps and collars on rent reviews to limit rental increases during high inflation periods and lease extensions averaging nine years for all 122 hotels. Previously the rent increases were based on uncapped RPI, but have now been converted to CPI+0.5% with a cap (maximum uplift) of 4% and a collar (minimum uplift) of 1%.
The regear also includes rent smoothing across the portfolio, resetting rent levels for the 122 Travelodge hotels to reflect the trading performance of each site. The total rent across the hotels remains the same, but has been smoothed on a site by site basis, to ensure that each hotel has a robust stand-alone rent cover.
New green lease provisions have been added to support Travelodge’s sustainability plan, ‘‘Better Future’. This includes:
- Sharing of energy, water, recycling and waste data.
- Co-operating on the environment, social and governance strategies of the landlord and tenant.
- Future proofing the leases to ensure the landlord has the necessary rights to enter the properties to make environmental performance improvements.
Travelodge also reported record financial results in 2022, significantly ahead of its previous best year in 2019.
What they said
Jo Boydell, Travelodge, CEO said: “We are delighted to announce record results for 2022, with our eighth consecutive year of RevPAR growth outperformance against our competitive segment and EBITDA significantly ahead of 2019 levels. Strong trading has continued into the first few weeks of 2023 with leisure and ‘blue collar’ customers continuing to prioritise travel and seek out value in tough economic times.
“We are also very pleased to confirm the completion of a mutually beneficial lease re-gear with our largest landlord, LXI REIT, which caps future rent increases and includes green lease clauses to support our sustainability plan “Better Future”.”