Arcadia will forward fund the construction of a 96-bedroom Travelodge above its largest Topshop outlet in Edinburgh, with a view to opening the property in summer 2012.
The development within the grade II-listed building on Princes Street represents a £10m investment by Travelodge, which has signed a 35-year lease with Arcadia.
Once operational the hotel will take Travelodge’s Edinburgh room stock to 1,230 rooms across 13 hotels.
Guy Parsons, chief executive of Travelodge, said: “Arcadia forward funding our new hotel in one of the most prestigious locations in Edinburgh just demonstrates how flexible the Travelodge development model is.
“Situated over four floors above Edinburgh’s biggest Topshop store on Princes Street, we will be utilizing space that was previously used for office and storage space. Given the lack of new development sites in central Edinburgh this really is one of the most prominent sites left in the city and we are delighted to have secured it.”
The group has also acquired another property in Edinburgh on Queen Street, as part of its 21-hotel acquisition announcement.
The announcement also includes sites in Walthamstow; Enfield; Bethnal Green; Sutton; Southgate; Eastleigh; Loughborough; Sittingbourne; Bedford; Gatwick Airport; Darlington; Altrincham; Malvern; Aylesbury; Newquay; Woking; Glasgow Airport; Hemel Hempstead and Kings Lynn.
The group has also exchanged on a property in Barcelona as part of its latest investment.
In addition, Travelodge is currently building 43 new hotels across the country, with 21 expected to open before the end of 2011. Once under construction, the hotels will boost Travelodge’s stable to 540 hotels and 39,957 rooms.
Parsons added: “The strength of Travelodge’s growth model has clearly been demonstrated, with the first six months of 2011 being the strongest in the Company’s history. We are not just exchanging contracts but most importantly finance is being secured upfront, to enable our developers to start on-site immediately.
“Everybody knows how difficult it is to obtain bank funding at the moment, so to have financed so many new schemes must be one of the biggest success stories of the UK property industry”.
In May the group announced plans to roll out a smaller Metro concept by utilising pubs, office buildings and snooker halls and converting them into 20-40 bedroom hotels.
Travelodge intends to have 100 Metro Travelodges in prime locations across the UK by 2020.