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Multi-million-pound loss on hotel ‘not ideal’ says panel

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CROYDON IN CRISIS: Whitehall-appointed inspectors raise serious doubts over the council’s property sales. By STEVEN DOWNES

Going cheap: the council has sold the Croydon Park Hotel at a loss of perhaps as much as £14m

The council’s sale of the Croydon Park Hotel at a loss of as much as £10million has been condemned by government-appointed officials.

Such a multi-million-pound loss for the bankrupt borough on the amount paid out of Council Tax-payers’ money just four years ago could yet prompt an investigation into the role of lobbying firms in the seemingly rushed-through deal.

“Disposing of a hotel in the current climate is not ideal,” according to the measured tone adopted in the latest report from the improvement panel, who suggested that the asset could be made to generate income for the cash-strapped council until a better offer came along.

The report, written by improvement panel chair Tony McArdle, was submitted to Whitehall at the end of August, when some haggling over the sale of the property was still ongoing.

Stuart King: works for developers’ lobbying firm

But last month, a council cabinet meeting agreed to go ahead with the sale of the Croydon Park Hotel to an as yet unidentified bidder, after having received bids of at least £19million.

The council has refused to reveal exactly how much it was to receive for the sale of this valuable piece of publicly-owned real estate.

What is known about the lucky buyer is that they have been represented by the Terrapin Group, a developers’ lobbying firm.

Since last April, a senior account director at Terrapin is Stuart King.

This is the same Councillor Stuart King who is Croydon’s deputy leader and who since the council’s financial collapse last year has been the cabinet member for “Croydon renewal”, responsible for “assets management”. This includes the sale of hundreds of millions of pounds worth of public property. Including the Croydon Park Hotel.

Councillor King maintains that all necessary declarations of interest have been made, and that he has excused himself from all council business in which Terrapin, or its clients, might have been discussed.

The council’s involvement with the Croydon Park Hotel has been controversial at every step along the way.

Tony Newman: paid £29.8m for hotelon the market for £25m

In 2017, Tony Newman, the then leader of the council, inexplicitly pushed through a deal which saw the council pay £29.8million for the hotel. The hotel had been placed on the real estate market with a price tag of £25million.

In 2020, the leaseholders who operated the business went bust, after  their landlords, the council,ignored their pleas for help over their rent during the first covid lockdown. This left the council with a town centre hotel with no one to run it in the middle of a pandemic.

The asset disposal strategy, involving the Croydon Park Hotel, Brick by Brick and sites such as College Green, has been something under discussion at the Town Hall since the start of the year – and long before Councillor King joined Terrapin.

According to the latest report from the improvement panel, which was released by the Department for Levelling Up, Housing and Communities, the bidders were “hotel operators and co-living developers”.

When drafting the report nearly three months ago, it is clear that McArdle was unaware of the sale price of the hotel (or the other property referenced, College Green). “The level of capital receipts expected from these assets is still to be determined,” he wrote.

The Croydon Park Hotel: proved controversial at every step of the council’s involvement

But the analysis of the market conditions offered by the improvement panel, which includes an expert on commercial and asset disposals, Phil Brookes, said, “Given the impact of covid-19 on the hospitality sector, disposing of a hotel in the current climate is not ideal.

“The council’s cabinet will need to consider whether delaying the sale and perhaps finding an alternative source of income from the venue in the interim offers the potential for a more favourable outcome overall. The potential for this option will be better informed once the sale value is finalised.”

In the event, last month’s cabinet meeting – with King “recusing” himself and what passed for discussion of the sale being led by his cabinet colleague Callton Young – barely touched on any alternative, “milking your assets” approach.

To discover exactly what McArdle, Brookes and the Whitehall mandarins have made of all that, we may have to wait until next year, when their next report is expected to be released.

Read more: Council flogs off hotel for less than £29.8m it cost to buy
Read more: Council planning decisions ‘open to corruption’, says research
Read more: After billions in regeneration deals, might Bingle eye Croydon?

 


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