Agenda item

The Sub-Committee considered the Call-In of Executive Decision EX/50/2014 ’Central Business District – Four Star Hotel’ that had been called-in by Councillor Williams on 9th October 2014.

At the invitation of the Chairman, Councillor Williams outlined his reasons behind the call-in of the decision. He began by explaining that whilst he was fully supportive of upgrading hotel accommodation in Blackpool, he disagreed with the proposed location of the site for this particular project. He stated that the inland position of the hotel was unlikely to appeal to the general tourist market. Furthermore, it would not be of interest to the major political parties for conference use, because of security issues in terms of its lack of proximity to the Winter Gardens complex. He also stated his perception that public feeling was not in support of the project. He went on to quote a costing formula which he had received via a 3rd party hotel operator which estimated a capital shortfall of around £250,000 that he stated would need to be found from public funds. He then quoted a number of financial variables which called into question the viability of the estimated repayment costs, based upon assumptions of occupancy rates, discounting and refurbishment costs.

In terms of financial risk, Councillor Williams outlined to the Committee his concerns that the Council was placing itself at full risk in terms of funding the project, whilst the development owner, the brand owner and the hotel operator would be taking no risk at all. He anticipated a serious shortfall in the projected rates that were outlined in the Executive report, as well as the length of time it would take to start to receive those levels of return.

In conclusion, Councillor Williams quoted from a letter that he had received from the Chairman of the Blackpool Combined Association, which outlined opposition to the building of any new hotel using Council funds.

The Chairman invited the Leader of the Council to respond to the call-in request. Councillor Blackburn explained that the Council first started to consult on the proposals for the Talbot Gateway site in 1999 and he stated that it had since become very clear that extensive public debate had been undertaken. He quoted from various newspaper articles in support of that view. He reminded the Committee that in 2009, the Talbot gateway scheme was signed off by the previous Leader of the Council, which included plans for quality hotel accommodation. The hotel project was one part of the Talbot Gateway opening which was bringing a much needed facelift to Blackpool.

Councillor Blackburn explained that a number of different financial mechanisms had been looked at and the Council was able to borrow the funds required at an extremely competitive rate. The figures quoted in the Executive report had been incorporated from 3 hotel operators, and took into account that all of the hotel staff would be paid the living wage. He added that all possible steps had been taken to mitigate against financial risks and that the hotel operators were not guaranteed to make a profit under the scheme.

In respect of the number of quality hotels in Blackpool, Councillor Blackburn informed the Committee that of the 896 hotels in the town, only 14 were 4 star and he believed that this hotel would attract a different type of visitor, contributing significantly to Blackpool’s economy. He stated his belief that to pause now would delay investment and show a lack of confidence.

Responding to questions from the Committee on the amount of money being borrowed to finance the scheme, Councillor Blackburn stated that £12.4m was the indicative figure and that the amount being paid back would depend on the period of the loan. Mr S Thompson, Director of Resources, added that there were a number of variables to be taken into account. It would be possible to shorten the re-payment period depending on the profit levels, although the in-principle decision had been taken on the facts currently available.

The Committee asked questions about the element of risk being taken. Councillor Blackburn responded by explaining that the in-principle decision to proceed was necessary at this stage in order to enable detailed negotiations to continue. Whilst it wasn’t possible to say exactly how much money would need to be repaid, he believed the risk was absolutely necessary to demonstrate continued confidence and to create and safeguard jobs for the future.

During the debate, the following proposal was made, seconded, voted upon and lost:

That the decision be referred for debate at full Council.

After further discussion, the Sub-Committee agreed to take no further action, thereby allowing the decision to be implemented immediately.

Background Papers: None.