Travelodge Buys 52 Mitchells & Butlers Properties

On Thursday, it was announced that Mitchells & Butlers has agreed to sell their Inkeeper’s Lodges to Prudential property investment arm Prupim, which will then be leasing the 52 properties to Travelodge in a 25-year deal. As part of the deal, Prupim is also buying 8 Mitchells & Butlers pubs, which are connected to the hotels, and then leasing them back to the company for a 25-year term.

This is all part of the UK pub group’s business strategy to sell non-core assets in order to focus on expanding their key brands. Mitchells & Butlers’ new chairman, John Lovering, announced the new strategy in March. It is their plan to sell 15% of the company’s estate, moving away from traditional drink-led pubs to those that offer full food services. The money earned from the £91 million sale will be used to reduce debt and fund capital investments.

Over the next 4 months, Travelodge is set to spend £10 million converting the hotels to their brand. However, the budget hotel chain says that they plan to keep all of the 430 staff that already work at the lodges, as well as recruit another 115 workers.

This is putting Travelodge well on their way to doubling their number of rooms in the UK in the next decade to 70,000. These 52 new properties have about 2,000 rooms, and the hotel chain is already planning to open 26 hotels in 2010.

Travelodge executive chairman Grant Hearn, who stepped into his new role from chief executive on July 1, said that this innovative deal is representative of last year’s growth. They hope to explore more opportunities like this with other similar companies, he added.