Council increases investment in city centre hotel

Council accounts show it had invested more than £8m by March 2023

A cash-strapped council has increased its multi-million pound investment in a city centre hotel.

Stoke-on-Trent City Council previously provided £6.9 million in loans to support the construction of the Hilton Garden Inn, part of the Smithfield development in Hanley.

Council leaders have now agreed to increase the authority’s investment in Genr8 Smithfield Hotel Ltd – the company that runs the hotel – but have not said how much extra money they have spent.

Council bosses said the hotel had a good outlook in the medium to long term, but since opening it has had to contend with the Covid-19 pandemic and high interest rates – meaning there was a need for more financial support.

The decision comes as the authority faces its own financial challenges.

Earlier this year the government agreed £42.2 million of ‘exceptional financial support’ for the council – effectively giving it permission to borrow that amount in order to balance its books.

In March councillors voted through £8 million in cuts and a 4.99 per cent tax increase.

Council leaders previously warned that without the extra government support they would have had to cut “pretty much everything”.

Councillor Alastair Watson, in charge of finances at the city council, defended the decision to lend more money to the Hilton operator.

“We have a world-renowned brand in Hanley with the Hilton, which anchors the city centre as a visitor destination and serves as an attraction for further investment which benefits all of us,” he said.

He added: “Despite the challenging financial situation faced by the council, there is a need to increase the level of investment to secure the position of the hotel into the long-term.”

'Challenging climate'

Plans for the Hilton Garden Inn were first announced in 2017, and the authority initially agreed to provide a £4.55 million loan for the hotel, which was increased by £2.3 million in 2018 in order to meet the project’s increased costs.

Construction of the hotel was affected by the collapse of main contractor Pochin and the Covid-19 pandemic, but the hotel opened in autumn 2020 with 140 rooms, a gym and a restaurant.

According to the council’s most recent accounts, its loans to Genr8 Smithfield Hotel Ltd stood at £8.64 million at the end of March 2023.

The decision to increase its investment was taken during a closed session due to it involving information relating to financial or business affairs.

This meant full details of the investment were not disclosed publicly.

According to the minutes of the meeting, cabinet members were given a detailed analysis of the proposed additional investment, and subsequently approved the proposed investment strategy.

A spokesperson for Genr8 Smithfield Hotel Ltd said: “The Hilton Garden Inn Hotel in Stoke-on-Trent brings quality hospitality to the area, and has demonstrated resilience despite opening in a challenging climate.

“We welcome any further investment to ensure its long-term future for the benefit of the broader community, encouraging businesses and visitors to continue to view Stoke as an attractive destination to work and explore.”

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