Banks in blame for collapse of hotels

The Wrea Head Country House Hotel, Scalby, Scarborough.   Pictures by Andrew Higgins  113523a   30/08/11
The Wrea Head Country House Hotel, Scalby, Scarborough. Pictures by Andrew Higgins 113523a 30/08/11

CORPORATE banking has been partly blamed for the collapse of the Wrea Head Hotel and the Hackness Grange Hotel.

Both properties were put into administration in the wake of the demise of the Turner family’s hotel empire.

Last week the Royal Hotel and the Clifton Hotel, owned by the Turners under English Rose Hotels Scarborough Ltd, went into administration.

The move came as a result of “significant” debts that had built up in tax arreas.

A matter of days later administrators were called to take over the Wrea Head Hotel Ltd, and English Rose Hotels plc, which owned the Hackness Grange. English Rose Hotels Scarborough Ltd was put into administrators by its bank the Co-operative, which refinanced a loan of £7.95 million for the company last year.

However Barclays Bank put English Rose Hotels plc and the Wrea Head Hotel Ltd in administration.

David Turner, managing director of all three companies, has blamed the bank for setting to high fees which he says crippled cash flow.

In a statement released to the Evening News Mr Turner said: “Despite year on year trading for the group being up on 2009/2010 - no mean task - crippling management and arrangement fees applied by Barclays Bank, from 2008 to the present day, have made it impossible for us to meet our forecasted cash flow.

“The magnitude of these fees has been quite simply exorbitant.

“In conclusion, it saddens me greatly to see that such greed exists in corporate banking, when the party line from our present government is for banks to assist businesses, not destroy them. It’s time for all politicians from all parties to wake up and see what is really happening in the banking world.”

Scarborough MP Robert Goodwill has revealed that he did speak to Barclays on behalf of English Rose Hotels in relation to their fees.

He said: “I did make representations to Barclays. It seemed as if some of the fees were quite exorbitant.

“However the banks do stand to lose money so I can see it is very difficult for them.

“On the one hand we are telling them to lend money to businesses again while on the other they are trying not to build up bad debts. In this case the companies had a lot of debts not just to the banks, so it is hoped a buyer can be found soon to help get some money back to the creditors.

“It is not as if these were failing business they just had trouble financing. They are superb hotels and I am sure there will be a lot of people out there who will be happy to pick up a bargain with one of these hotels, the likes of which often only occurs once in a generation.”

It is believed all three companies were linked to such an extent, working with the same suppliers and staff, that Barclays had no alternative other than following the Co-operative’s lead and calling in the administrators. A spokesman for Barclays Bank said: “Following the administration of English Rose Hotels Scarborough Limited which does not bank with Barclays, the administration of English Rose Hotels Group became inevitable because of the entwined nature of the two businesses.”