Council-owned Croydon Park Hotel calls in administrators

EXCLUSIVE: All 91 members of staff at the 4-star town centre hotel were made redundant on Monday, as the impact of the coronavirus pandemic hits the local economy hard. By STEVEN DOWNES

The Croydon Park Hotel won’t be reopening its doors for some time

The company which operates the Croydon Park Hotel has blamed coronavirus’s devastating effect on its business for its decision to go into financial administration.

All 91 staff were made redundant on Monday, with the administrators from KPMG urgently seeking offers for the remainder of the lease.

This is the second shattering blow within 24 hours for Croydon town centre, and for the council’s financial and economic strategies (such as they were). It follows the news, reported exclusively by Inside Croydon yesterday, that up to 80 casual workers at the Fairfield Halls had been “let go”, as the arts venue goes “into hibernation” because of the pandemic lockdown.

In 2018, Croydon Council bought the freehold of the loss-making Croydon Park Hotel for £29.8million – £5million more than the asking price. At the time, Simon Hall, the council cabinet member for finance, explained: “This purchase will enable us to bring in additional income to the council, securing a new revenue stream to fund core services.

“At a time where government grant funding for local authorities continues to fall, we have to look at new and innovative ways to ensure we can provide services to residents.

Simon Hall: ‘securing a new revenue stream’

“This purchase is one way to do it.”

This commercial investment policy, which has also been adopted by other local authorities, has been roundly criticised for being high-risk and because of the council’s lack of expertise in the commercial property sector. Croydon Council has accumulated debts of £1.5billion, in part to fund its “investments” such as the Croydon Park Hotel, the purchase of the Colonnades leisure complex (which has also been closed throughout the lockdown period), and other commercial properties.

“I wonder how many of the hospitality businesses on the Colonnades site which the council also purchased can’t now pay their rent to the Croydon Council?” one councillor told Inside Croydon.

“The property speculation game played by Newman and Hall is starting to unravel,” they said. “How will the hotel pay its rent to the council if it’s closed for months on end? I’d like to know what sensitivity analysis they undertook around what a severe economic downturn could mean for the income that this was supposed to generate for the council.”

Kasterlee UK Ltd is the company which has run the 211-room, 4-star hotel close to East Croydon Station since 2017. It seems very likely that the council has received no rent from Kasterlee at least since the end of March.

Since lockdown began, the council had been using the hotel’s rooms as temporary accommodation for key workers and shielded accommodation for the vulnerable. That arrangement ended last weekend, forcing the hotel’s management to call in the administrators.

In a statement issued by KPMG, they said, “While the hotel had been closed to visitors since lockdown measures were introduced in the UK on March 23, it had been used in recent weeks by the local authority to provide temporary accommodation for key workers, as well as shielded accommodation for vulnerable people in the local community.

All the hotel’s staff have lost their jobs

“However, with that arrangement coming to an end on June 14, and with the impact of Covid-19 having a significant impact on the company’s cash position, the directors of the business took the difficult decision to appoint the joint administrators.

“Regrettably, all 91 members of staff have been made redundant. The joint administrators are speaking with all employees to provide them with all available support and assistance.

“The joint administrators are now considering their options to realise value for the business. Any parties with an interest in purchasing the lease should contact Terri Mulgrew at KPMG (terri.mulgrew@kpmg.co.uk) as soon as possible and before June 26.”

For its part, the council has yet to issue any statement on the fate of the hotel, or the Fairfield Halls.


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About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
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12 Responses to Council-owned Croydon Park Hotel calls in administrators

  1. sebastian tillinger says:

    We need councillors and cabinet members who know about how business, property and commerce works and are able to positively engage and operate within this world. If not, we will keep on making bad decisions and the burden of this administration’s debt in our borough will grow.

    I have no confidence in this Council.

    • Thing is, Seb, it is not the councillors who do this work for the council, but the council execs and officials.

      The councillors notionally set the policy for the council, though it has been hard to detect a fundamental change of course by this council since 2010. The council execs – Rouse, Elvery, now Negrini – really call the tune. If they don’t want to do something, they don’t.

      And does the council staff have the kind of experience needed for dabbling in the high-stakes casino of property speculation, or as housing developers? Of course not.

    • We need councillors who recognise that dabbling in property speculation is an extremely risky business and instruct the officers to stay well away from it.

  2. John Harvey says:

    No Seb, No Inside Croydon

    The real villains are the consultants who make oodles convincing politicians and officers that they are at no risk.

    Read up on Spelthorne’s purchase of BP’s European Headquarters (the largest example of municipal- get-rich-quick by buying commercial property investments which can’t go down in value) and make the difficult decision as to whether we should laugh or cry.

  3. David Wickens says:

    Plan B might be to grant planning consent to redevelop the site for flats. Not much risk of a Brick by Brick application being refused.

  4. Lewis White says:

    I wonder how the nearby Jurys Inn and the Travelodge hotels are also going to fare? I feel very sad for the staff of the Croydon Park Hotel.

    Hotels have been regarded as a key part of urban centre renewal.

    The choice here seems to be a new hotel or new tall residential block. As David W says above, the latter looks a strong possibility.

    • Travelodge has gone bust, Lewis. The hotel chain’s landlords yesterday signed off on proposals for a company voluntary arrangement (CVA), which will involve Travelodge temporarily reducing rents and moving from quarterly to monthly payments on certain leases.

  5. Lewis White says:

    Thanks for the update, if a very sad one too.

    On an urban renewal note, the Croydon Travelodge converted a 1960s brick-built office block – Norfolk House, on Welesley Road. It was a very good example of re-cycling a building, not demolishing it.

  6. Marimuthu says:

    How do I get a refund for my four years membership for the gym.

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