Council makes big loss on hotel sale

Wednesday 26th February 2020 8:29 am
Share
Metro Inn on the A3 ()

Subscribe newsletter

Subscribe to our email and get updates right in your inbox.

EAST Hampshire District Council has revealed it lost £328,500 selling the Metro Inn hotel and Starbucks Cafe at the Liphook Services.

The authority bought the assets on the northbound side of the A3 in November 2014 for £1.4 million.

However, on February 10, it was sold for £1.2m.

Very soon after the site was bought, the hotel closed, rent debt and maintenance costs piled up, and it never re-opened.

Since the closure, the district council refused to admit how much it had lost through buying the hotel.

It had claimed revealing the extent of the loss – which includes £147,247 of ‘bad debt’ – could affect any potential future sale.

The Metro Inn was bought as part of the district council’s commercial property investment strategy – rental properties it buys to generate income.

The district council owns things like the Iceland building in Alton, Rams Walk in Petersfield and even a branch of Tesco in Quedgeley, Gloucester, valued at £38.9m.

But this week Labour member councillor Paula Langley expressed concern about the council’s £140m portfolio in light of Brexit and said it amounted to “gambling” with public funds.

She believed the portfolio is “highly risky” and cited the hotel loss as an example.

“Many of the properties are not even in Hampshire and so do nothing to regenerate our towns or provide local employment opportunities,” she added.

“We know the failure of the A3 motel – that should be a warning sign.”

In a statement, the council said: “The cafe continued to provide steady rent for the council.

“But after the hotel ceased trading, it made sense to sell the site and look for investment opportunities elsewhere.

“Together with lost rent and maintenance bills, the site cost the council a total of £328,500.

“We accept the costs incurred as part of building a strong and diverse portfolio and overall the investment strategy has been very successful.

“The portfolio is worth more than £140m and generated more than £10m gross income in the past financial year.

“Around one-third of the council’s total income is generated by the investment portfolio – more than that received through council tax or from the government.

“This allows the council to provide the vital services residents expect.”

Councils have had to find new ways to generate revenue following a dramatic drop in central government funding in recent years.

Comments

To leave a comment you need to create an account. |

All comments 0