In 2018, the borough council bought the 140-room property in St Nicholas Cliff for £14 million, using funds from the Public Works Loan Board.
The company has been hit hard during the pandemic with the majority of its 550+ hotels closed, which has led it negotiating with landlords such as the borough council for rent reductions.
The company has been preparing to launch insolvency proceedings in the form of a company voluntary arrangement (CVA), in an attempt to cut its rent by about 40% over the next 18 months.
Council leader Cllr Steve Siddons made a statement at today’s cabinet meeting to say he would be taking an urgent decision to agree to the reduction in rent for the council-owned building.
He said: “We now find ourselves in the situation of negotiating through an independent third party with the Travelodge group which will result in the temporary loss of rental income to the council for a two year period before the previously agreed contractual rental income resumes after 2021 and over the remainder of the unexpired lease over 22 years.”
Cllr Siddons said he had the support of the cabinet in making his decision.
Prior to the pandemic, the Travelodge was delivering a net income of £328,000 per annum to the council.
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