Mansfield District Council to sell hotel after travel industry takes a hit because of Covid
A Travelodge in Edinburgh owned by Mansfield District Council is expected to be sold by the authority after the site became “unsustainable” for the hotelier.
The authority bought the land, at 18-20 Learmonth Terrace in the Scottish capital, in March 2014 as an investment before opening a 35-year lease with the hotel provider.
Council documents from 2018 estimate the building, close to the Stockbridge and Haymarket areas of the city, to be worth more than £8 million.
However, documents due to be reviewed this week state the hotelier has conducted a review into its current leases following the Covid-19 pandemic.
The travel industry took a hit during successive lockdowns, and Travelodge viewed the lease as no longer suitable for its business model.
The impact from the pandemic created a rent-free period for hoteliers, running between March 2020 and December 2021, and Travelodge has the opportunity to terminate its lease with the council at the end of this period.
This, the council says, is “highly likely” should a new lease not be agreed, and now the council will declare the site surplus to requirements.
A delegated decision by the portfolio holder for corporate and finance on Friday (September 3) is expected to allow the site to be sold for residential conversion.
The council documents say: “Travelodge is highly likely to break its lease, should a new lease not be agreed.
“Negotiations have been ongoing with Travelodge during the past 12 months, with regard to a new lease.
“Travelodge has recently increased its offer with effect from January 1, 2022, with a 15-year lease and five-yearly CPI reviews.
“More recently, Travelodge has indicated it may look at including a turnover top-up element and a landlord’s break option at year seven.
“The council’s appointed external valuer has carried out a revised asset valuation… and identified a fall in value.
“[It is] recommended that best value could be achieved by selling the asset to a residential developer.”
The 2018 council documents state annual rent from the hotel generated more than £600,000 per year.
But the council says its best option in handling the Edinburgh hotel was to sell the site, offering the least risk to the authority.