Travelodge - comment

Good for the bonds. The company outperformed our forecast in two key areas: revenues and M&A outflow. The former is also set to survive Q3, considering guidance provided on occupancy. We had been concerned that, in the wake of the Iran conflict, UK investments and hence business travel would slow down this summer. Apparently those concerns were unfounded. We are equally surprised by how suddenly the company seems to have been able to stop M&A outflows. We would expect a much longer slowdown of these usually pre-committed payments. We will ask the question if we are allowed. More interestingly, however, we have been playing with our model, and even when considering the improved outlook, the company still needs a funding solution early next year - when the Prop Finco financing needs addressing. So we will be thinking through the likely scenarios, considering the potentially improved operating outlook, but essentially from the same short perspective we presented yesterday.