Hotel viable despite poor performance - boss

A council-owned hotel is "viable" despite criticisms of its financial performance, the boss of a firm that manages authority investments has claimed.

Coventry City Council bought Coombe Abbey for a reported £9.1m in 2017, but in 2023 the BBC reported the business had lost almost £3m in two years and was worth just £1.1m.

Now opposition councillor Marcus Lapsa has told a council meeting the hotel company, Coombe Abbey Park Ltd, was worth just £100,000 in March 2024.

However Grant McKelvie, the director of Coventry Municipal Holdings, accepted the market was "not the easiest", but said exciting plans were in place for the four-star hotel.

Members of the ruling Labour group have historically claimed the hotel will bring around a 10% return.

At a scrutiny meeting last week, Conservative councillor Julia Lepoidevin quizzed officials on the Grade I listed hotel's future.

"With such poor financial performance of the hotel, are there proposals to refurbish and where would the funding come from if a decision on that was made?," she said.

"If a private company could not make the hotel succeed why do we think we can and when can we see it really succeed?"

Mr McKelvie said they had started to see in the last couple of years where some areas of the hotel are "slightly tired" and that a "significant" programme of work was taking place, starting with its ground floor.

He added there were plans to refurbish bedrooms and, while this was "incredibly expensive", it would be funded from hotel revenues, with proposals being "priced up and looked at."

Mr McKelvie told the meeting the hotel was viable, confirming accountants had signed it off as a going concern, and was returning a "viable response" back to the council as an investment.

He added: "There's obviously opportunity for it to be able to perform better but we're operating in a market that's not the easiest when it comes to individuals, customers' willingness to spend in that market and the cost base that we have in operating a Grade I-listed building."

Asked when the council will start getting dividends from the hotel, he said this was commercially confidential but could be discussed at a later private meeting with councillors in attendance.

He said a shareholder meeting later this month will include more detail on how the businesses benefit the city beyond financial accounts.

"There are costs that we have within all of the businesses that are returned to the council through other routes such as rent and loan repayments and those sorts of things," he said.

Chief financial officer Barry Hastie told councillors the hotel brings the council over £200,000 per year – double what it was before they took ownership.

He said there were a number of reasons for the council buying the hotel, including protecting its financial stake and a heritage asset.

Mr Hastie also pointed out the impact of the pandemic and cost of living crisis on the hospitality industry, and said the hotel had never missed a loan or rental payment.

Officers confirmed that six of the hotel's direct competitors in the region had gone into administration in the last few years.

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This news was gathered by the Local Democracy Reporting Service which covers councils and other public service organisations.