TRAVELODGE AND LOCAL AUTHORITIES WORK TOGETHER TO FINANCE THE CONSTRUCTION OF NEW HOTELS
9th Oct 2013
The UK’s first budget hotel chain, Travelodge has written to 124 local councils in Great Britain following its successful co-partnership deals with local authorities for its Aylesbury and Eastleigh Central Travelodge hotels.
Through this innovative partnership, local authorities borrow money from central Government via the Public Works Loan board at a fixed low interest rate and regenerate surplus land that they own by building a Travelodge hotel as either a stand-alone project or as part of a mixed-use development. Not only does this create jobs and boost the local economy but it also provides a substantial return of profit for the council.
For example, Aylesbury Travelodge which officially opened last week, is the first branded budget hotel to open in the town centre. The 81-room property has been funded by Aylesbury Vale District Council as part of a £18 million regeneration project which includes a Waitrose supermarket, a 270-space multi storey car park and the Travelodge hotel.
Enterprising Aylesbury Vale District Council borrowed funds from the Public Works Loan Board, a division of HM Treasury at a fixed low rate of 4.5% to fund this project.
The rental deal agreed between Travelodge and the District Council, plus the income from the other site occupiers means - Aylesbury Vale District Council is set to generate a double digit return on its investment.
Councillor Neil Blake, Leader of Aylesbury Vale Council, said: “The redevelopment of Aylesbury town centre has been something we have been working hard to achieve for a long time and it is great that we have secured our first branded budget hotel, a Travelodge property in the heart of the town centre.
“At a time when so many other town centre redevelopment projects across the country were being delayed, scrapped, or put on hold, we are delighted to have been able to push forward with our regeneration plans and secure an impressive yield on the site. Many people have been involved in getting us to this point, in particular Cllr John Cartwright, who has recently stepped down as Leader of the Council after 11 years in the hot seat.
“The new development, including the addition of the Travelodge has not only significantly enhanced the attraction and vitality of Aylesbury, but has meant that we can now confidently move forward with the rest of our plans to improve the town.”
Commenting on the deal, Neil Parlett, Director of Public Sector Advisory Services at Lambert Smith Hampton, said:
"Travelodge and Aylesbury Vale District Council worked hard to secure an effective development partnership. This model for delivering economic development on robust commercial terms should be an attractive template for many other Local Authorities."
Earlier this year, Travelodge opened a new hotel in the centre of Eastleigh, a deal which also came about through a partnership with the local authority and was funded via Prudential Code borrowing via the Public Works Loan Board.
Alongside the successful examples of Aylesbury and Eastleigh, Travelodge is also in advanced negotiations with five other local authorities across the UK for developments utilising land and assets owned by the councils.
Given the success of the two schemes developed so far and the apparent willingness of other local authorities to look at ways of maximising the potential of their land and assets, Travelodge has now written to 124 local authorities in Great Britain - who all have locations identified within the Company’s hotels target location list. The letter explains how Aylesbury Vale and Eastleigh Councils were both willing to be creative in securing funds to finance vital regeneration schemes which included the construction of a Travelodge hotel on land or assets owned by themselves.
Paul Harvey, Travelodge Managing Director for Property said: “We are the first UK budget hotel brand to work with local councils on co-partnership developments. The deals we have done so far have provided a great investment opportunity for both parties and as a result of this innovative calibration, we have today written to 124 other local authorities across England & Wales to see if we can work with them on a similar scheme."
“Both Eastleigh and Aylesbury Vale are forward-thinking, innovative and enterprising local authorities. Both councils have recognised the opportunity to add new facilities into their towns whilst making a good return on their investment.”