Council-owned luxury hotel losing millions

Coombe Abbey Hotel was bought by the council for £9.1m in 2017

A luxury hotel owned by Coventry City Council lost £1.4m a year over the past two years, leaked documents have revealed.

A private report by council officers to the scrutiny committee provided details of some of the local authority’s investments in private firms – including Coombe Abbey Hotel.

Trading losses of £2.8m recorded by private operator No Ordinary Hotels means expected dividends for the council of £3m over the next three years have now been revised down to zero.

The firm has been approached for a response.

Figures show the city council is owed £8.4m in outstanding loans to the operator.

The hotel, bought by the council for £9.1m in 2017, is now worth just £1.1m – an 88% drop - according to an external valuation commissioned by the authority.

Conservative councillor Gary Ridley said the investment had "turned out to be a house of horrors"

Earlier this month, Labour councillor Richard Brown, Coventry City Council’s cabinet member for finance, said the authority could be just 12 months away from being effectively bankrupt without additional government funding.

• Listen: Is it time to sell Coombe Abbey?

Gary Ridley, the leader of the Conservative opposition on Coventry City Council told the BBC there was no justification for taxpayers to continue to prop up the business in the context of the wider financial picture.

Mr Ridley said: "The £1.4m loss is almost equal to 1% on the council tax. Now when they bought this they told us it was going to raise huge amounts of money for the people of Coventry. But it hasn’t turned out that way.

“If anything, it’s turned out to be a house of horrors, it’s been a nightmare investment and it’s time that the council dealt with this once and for all."

Coventry City Council Director Andrew Walster said the leisure sector as a whole had suffered since the pandemic

Andrew Walster, a director for Coventry City Council’s arms-length companies said the level of debt held by the firm was not dissimilar to that when it was originally purchased.

"What we have had to face is two years of Covid impact and coming out of probably the worst trading period for any leisure industry," he said.

"And we’ve seen a number of businesses, like Coombe, actually go to the wall recently and we haven’t had to do that, and it’s not something we’re going to do in Coventry."

Tom White Waste is also owned by Coventry City Council

The report also looked at the performance of Tom White Waste, which was purchased by the council for £14.9m in 2020.

The refuse company has seen its value drop by almost a third to £10.6m – despite turning a profit of £147,000 last year.

The report also revealed that Tom White Waste had abandoned plans to build a new recycling facility – despite already spending £500,000 of a council loan on the project.

Increasing costs and inflation were blamed for the decision – and Mr Walster insisted the loan money would be paid back to the council.

Earlier this year, the local authority lost a £1m loan made to the Coventry City of Culture Trust, when it collapsed.

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