Struggling hotel chain set for new American owners

The company, which owns 470 hotels across the UK, Ireland and Spain and employs around 6,000 staff, has six weeks to raise £60m or it could face administration, according to a report yesterday.

Two American hedge funds, Avenue Capital and Golden Tree Asset Management, are expected to step in with the money needed in return for control of the business, which is currently owned by private equity firm Dubai International Capital (DIC).

Travelodge is thought to be trading well but is struggling to deal with £530m of debts, accrued during a buyout spree before the financial crisis set in.

Avenue Capital and Golden Tree specialise in taking over struggling businesses by taking ownership in return for writing off debts.

The two firms, which control funds of about $35bn (£22bn) between them, are understood to be planning to stump up the cash to prevent Travelodge from defaulting on its loans – its interest bill alone is £100m a year.

DIC, which paid £675m for the firm in 2006, could try to retain its stake in Travelodge, but this is reportedly unlikely.

Travelodge is the latest casualty of takeover debt, with Peacocks, the low-cost fashion chain, falling into administration last month.

Last year, riots in England cost Travelodge £1m after it received more cancellations than bookings in the two weeks surrounding the mayhem.

Some 81 hotels were in areas caught up in the chaos and although none were forced to shut, many received high levels of cancellations, particularly in London.

Meanwhile, the company announced last month it is to create 1,000 jobs at 41 new hotels across the UK this year, including one in Mill Street, Bradford, creating 15 jobs.

Recruitment has started for posts including managers, receptionists, housekeepers, cleaners and bar staff at new sites which also include London, Edinburgh, Liverpool, Chester and Sunderland.

The firm is also recruiting 120 new apprentices on its junior management programme to join 35 who started in 2011. The company said it had been “overwhelmed” by the high calibre of people trying to gain places after attracting more than 3,000 applications – 66 for every position.