Coombe Abbey Hotel, which Coventry City Council purchased for £9.1 million in 2017, has been revealed to have incurred losses of £1.4 million annually over the past two years, according to

leaked documents. A private report from council officers to the scrutiny committee disclosed the financial status of the local authority's investments in private companies, including Coombe Abbey Hotel.

The hotel has been operated by No Ordinary Hotels, which has reported total trading losses of £2.8 million in the past two years. Consequently, the council's anticipated dividends of £3 million over the next three years have been revised down to zero. The operator, No Ordinary Hotels, has yet to respond to these revelations.

The figures also indicate that the city council is currently owed £8.4 million in outstanding loans by the operator. Furthermore, the hotel's value has dramatically declined, with an external valuation commissioned by the council valuing it at just £1.1 million, an 88% decrease from its initial purchase price.

Earlier this month, Coventry City Council's Cabinet Member for Finance, Labour councillor Richard Brown, cautioned that the local authority could be on the brink of effective bankruptcy within 12 months if it does not receive additional government funding.

Gary Ridley, leader of the Conservative opposition on Coventry City Council, argued that taxpayers should no longer be expected to support the hotel, considering the wider financial implications. He pointed out that the £1.4 million loss nearly equates to a 1% increase in council tax. Ridley expressed his disappointment with the investment, characterizing it as a "nightmare investment" and calling for the council to address the situation decisively.

Andrew Walster, a director for Coventry City Council's arms-length companies, acknowledged that the level of debt held by the firm was comparable to the time of its acquisition. He emphasized that the leisure sector, including Coombe Abbey Hotel, has suffered significantly due to the pandemic and challenging trading conditions, but reassured that the council has no intention of allowing the business to fail.

The report also examined the performance of Tom White Waste, which the council acquired for £14.9 million in 2020. Despite turning a profit of £147,000 in the previous year, the refuse company's value has declined by nearly one-third to £10.6 million. The report also highlighted that Tom White Waste had abandoned plans to construct a new recycling facility, despite having already used £500,000 of a council loan for the project. This decision was attributed to rising costs and inflation, with Mr. Walster assuring that the loan amount would be repaid to the council.

In a separate incident earlier this year, the local authority lost a £1 million loan granted to the Coventry City of Culture Trust when the trust went into collapse. Photo by Tim, Wikimedia commons.