Newcastle City Council is poised to take ownership of a four-star city centre hotel which owes it around £40 million.
It has emerged that control of the Crowne Plaza Hotel, a flagship development in the Stephenson Quarter area behind Central Station, is set to be handed to the local authority as recompense for the huge unpaid debts following a series of loans. Accounts published by the Clouston Group, whose subsidiary Stephenson Hotel Limited is the current owner of the 251-bed hotel, reveal that an agreement is being struck that will see the council take ownership of the site and some neighbouring land.
Documents published on Companies House state that Stephenson Hotel Limited owed the council £38.9 million as of December 31, 2023 – a figure which the Local Democracy Reporting Service understands has since risen to £39.4 million, including interest that has accrued over the years. The estimated value of the hotel itself is thought to be substantially less than the debt owed to the council.
Building of the hotel was completed in 2015, with the help of a £15 million loan from the council, amid hopes that it would become a catalyst for a regeneration of the area that is still a work in progress today. There was then a further £14.8 million loan agreed in 2019, followed by an extra £1 million the following year from an emergency pot set up to help save “essential” businesses from financial ruin during the Covid pandemic.
Local authority officials have previously described the Crowne Plaza as “one of the best performing hotels in the city” and insisted there would be “no cost to the taxpayer” from the multi-million pound lending. Civic centre finance chiefs said last year that they were in “fairly intensive” talks with the Clouston Group over repayment terms for the loans.
But, the company’s accounts now confirm: “The Group is in negotiations with its principal lender, NCC [Newcastle City Council], which started in early 2023 and continue to be ongoing to agree appropriate repayment terms, as the loan has expired. This will form part of a consensual agreement to resolve the other liabilities in all Group companies which relate to this lender in return of NCC obtaining ownership of the hotel building and land held by Stephenson Quarter Developments Limited.”
Clouston Group as a whole reported net liabilities of £42.5 million and a net loss of £5 million in 2023. The company was originally the council’s development partner for the wider Stephenson Quarter area, but was later removed from the project in 2018 and a new joint venture was launched with PfP igloo.
In March 2019, hotel managers IHG had their contract terminated and Interstate was appointed to replace them in an effort to improve its trading performance and value. The Clouston accounts state that the switch “should have led to a stabilisation by 2024”, but that progress was arrested by lockdown measures once the pandemic hit.
Stephenson Hotel Limited reported a net loss of £4 million in 2023, though room occupancy rates rose from 79.5% to 85.7%.
Join our Breaking News and Top Stories WhatsApp community
Join our Breaking News and Top Stories WhatsApp community for all the latest news direct to your phone.
To join you need to have WhatsApp on your device. All you need to do is choose which community you want to join, click on the link and press 'join community'.
No one will be able to see who is signed up and no one can send messages except the ChronicleLive team.
We also treat our community members to special offers, promotions, and adverts from us and our partners.
If you don't like our community, you can check out any time you like. To leave our community click on the name at the top of your screen and choose 'exit group'.
If you’re curious, you can read our privacy notice.
