Travelodge wants to open two new Yorkshire Coast hotels in plan to replicate Scarborough deal

The budget hotel chain, which currently operates 13 hotels across North Yorkshire, has expressed interest in opening new sites in Whitby and Bridlington, which it says could create up to 175 new jobs.

It has written to Scarborough Borough Council and East Riding of Yorkshire Council proposing a “joint development partnership”.

Such a deal, Travelodge claims, could provide local authorities with a “solid long-term income stream” as a landlord.

A similar scheme is already in place for Scarborough’s 140-room hotel on St Nicholas Cliff, which Scarborough Council bought for £14m in 2018 using funds from the Public Works Loan Board.

Prior to the Covid pandemic, the Travelodge was delivering a net income of £328,000 per annum to the council.

However, the authority agreed to a two-year rent reduction due to the impact of the pandemic, which led to a loss of £762,000 from a Company Voluntary Arrangement in 2020.

The hotel is let to Travelodge for a term of almost 30 years with five-yearly rent reviews.

Now the company wants to replicate the deal it has for its Scarborough hotel elsewhere on the Yorkshire Coast.

Funding is provided either directly from a local authority, via the Public Works Loan Board or through third-party resources.

When the development is complete authorities then have a choice of either retaining ownership and receiving an annual rent or to sell the hotel with Travelodge as its operator.

Such a scheme with councils allows the developer to sell the leasehold at a much lower investment yield than a lease with Travelodge would achieve.

Travelodge claims this type of structure makes the project financially viable and therefore delivers new town centre regeneration which would not otherwise happen.

It wants to build a further seven new hotels in North Yorkshire, including Knaresborough, Ripon and Northallerton.

Steve Bennett, Travelodge’s chief property and development officer, said: “In the current climate, local authorities are under extreme pressure to invest in their economy and support regeneration projects.

“This is why we have written to seven local authorities across North Yorkshire to offer our support as we have a requirement to add to our portfolio with a further seven hotels across the region.

“This expansion programme could represent a multi-million investment for third-party investors and our research shows that, on average, Travelodge customers will spend at least double their room rate with local businesses during their stay; this can be an annual, multi-million pound boost into each local economy.”

“We have a proven track record of working with 25 forward-thinking local authorities across the UK. Our innovative co-partnership development deals are spearheading regional economic growth and providing a solid long-term revenue stream.

“Britain is now a nation of budget travellers, with more of us choosing to stay in budget hotels than any other hotel type and this trend is set to grow, which is why we are looking to expand our UK hotel network with a further 300 hotels.

“Adding a Travelodge hotel can be a catalyst to attract new businesses to support regeneration, bring vacant buildings back into economic use as well as attracting thousands of new overnight visitors to the area and revitalising high streets.”