Travelodge to expand into London

The 2010 Olympics is seen by many as a lucrative time for expanding businesses. Travelodge is among the long list of travel businesses that will want to be a part of the bargain and has plans of expanding business into London. They have reportedly raised 100 million pounds to finance their foray into London.

A new investment company, Twenty 10 Fund Management will be funding Travelodge. They are determined to build five hotels every year in UK cities which will be operated by Travelodge on 25-year or 30-year leases. The investment company, run by Christopher Stainforth, will be in charge of managing the fund and are reported to have a seven year life span. They plan to raise 50 million pounds in equity and 50 million pounds in bank debt.

Dubai International Capital, which owns Travelodge, reportedly wants to increase its stake in the UK hotel market. Based on reports, the UK hotel sector recently grew more than three times its hotel market.

Paul Henry, the managing director of International Management for Travelodge, believes that funding will be essential to help capitalize on the opportunities currently available without the help of an investment partner. Mr. Stainforth was of the opinion that the fund gave investors a chance to participate in the creation of a portfolio on institutional grade assets given to a tenant with a strong covenant and at an attractive net yield.

The downturn in economy was exploited by Travelodge and was used as an opportunity to build more hotels. Also, funds were raised by the firm to buy struggling hotels, thus consolidating their standing in the UK hotel market. Both parties involved are expected to gain tremendously from the alliance.