Travelodge has exchanged contracts to build its first hotel on land formerly designated for residential development.
Paul Harvey, Travelodge’s managing director for London, said the company has been offered more than 100 residential sites since the start of the downturn, but this is the first the company has decided to develop.
‘The vast majority are simply not suitable for a hotel development,’ said Harvey.
The site was bought by City & Suburban Homes two years ago for around £2m.
It then gained planning consent for 14 luxury apartments and was intending to find a residential developer to buy the site.
A potential buyer was found but then pulled out when the residential market collapsed.
City & Suburban has now sold a 25 year lease of the site to Travelodge. Travelodge is paying £5.5m for the lease and to develop the 97 bed hotel.
The budget hotels business has been booming as the UK economic climate worsened and last year converted a further six offices in the UK into hotels.
The company, owned by Dubai International Capital, operates 369 hotels, predominantly in the UK, 31 of which are in London.
It plans to have 40 hotels in London by 2012 and will open three more office conversion hotels in London in 2009.