A NEW tenant is being lined up for an 80-room hotel development after Travelodge announced cost-cutting measures.
M & D Developments, landlords at New Shire Hall, in Raingate Street, Bury St Edmunds, confirmed yesterday that it was now in ‘advanced discussions’ with Premier Inn to take on the development.
Planning permission for the project was given in July.
Last Friday, Travelodge announced it was entering into a company voluntary arrangement (CVA) to address its £633 million debt.
At the time, a spokesman for the chain claimed that although a hotel will open on the New Shire Hall site, it may not be run by Travelodge as negotiations take place with M & D.
But David Harris, a director of M & D, said Travelodge would not be running the new hotel and that the landlords were now in advanced negotiations with Premier Inn.
“As far as we are concerned their financial situation is a problem for us.
“There are no negotiations between us and we are now in advanced discussion with Premier Inn,” he said.
Brian Green, KPMG restructuring partner, which is supervising Travelodge with the CVA, said some of the firm’s hotels would be sold off.
“Forty-nine hotels out of a total of 505 have been identified for transfer to other operators.
“The landlords of these hotels are being asked to accept a 45 per cent reduction in rent until the hotels are transferred.
“A further 109 hotels have been identified as being viable at a reduced equivalent monthly rent of 75 per cent.”
Travelodge does not own its hotels and many leases are proving to be ‘unsustainable’, according to KPMG.
Travelodge is aiming to write off £304 million with the CVA.
It also has branches in Needham Market, Stowmarket and Barton Mills.