Thursday, Apr 12, 2012

LONDON (Dow Jones)--Travelodge Thursday said Chief Executive Guy Parsons is to leave later this month and will be replaced by former CEO Grant Hearn, as the privately-owned U.K.-based budget hotel operator continues negotiations with investors over debt restructuring.

Parsons will step down on April 20, the group said in statement. Hearn was previously CEO between 2003 and 2010, during which period Keith Hamill was chairman. Hamill, currently deputy chairman, will resume the chairman role, it added.

"During recent discussions regarding our financial restructuring, the board has expressed their wish for me to lead the business once again," Hearn said. "Clearly, as recently has been said, there cannot be two captains running a ship and as a result Guy [Parsons] has decided to leave the company."

Parsons said: "This is a good time for me to step down as CEO of Travelodge."

Travelodge was bought by Dubai Holding's investment arm Dubai International Capital for GBP675 million in 2006 and embarked on a spending spree across the U.K. and Europe.

However, in February, it said it is restructuring the company due to its debts. The company is in negotiations with two U.S. hedge funds, Avenue Capital and GoldenTree Asset Management, about an injection of capital.

Thursday, a Travelodge spokeswoman said the talks, which are "going well", are ongoing without a set timeline.

Budget hotel operators have traded well through the economic downturn, as bargain-hunting consumers seek cheaper hotel rooms.

The group operates 500 hotels and 35,000 rooms mainly in the U.K., but also Spain and the Republic of Ireland. It targets 1,100 hotels on the continent and 100,000 rooms by 2025. It is opening 41 hotels this year.

Still, Travelodge has faced competition from rival budget hotel chain Premier Inn, owned by U.K. hotel and restaurant group Whitbread PLC (WTB.LN).

Premier Inn is the U.K's largest hotel brand with more than 600 hotels and around 45,000 rooms.

Despite sluggish trading recently outside London, Whitbread is on track with its plans to increase the number of rooms in the U.K this year by around 4,000, or 9%.

It also targets increasing Premier Inn's U.K. capacity by 50% to 65,000 rooms in the next five years.

-By Simon Zekaria, Dow Jones Newswires; +44 207 842-9410; simon.zekaria@dowjones.com

(END) Dow Jones Newswires

12-04-12 1419GMT