A Newcastle hotel is set to be taken over by Newcastle City Council in lieu of loans owed by its developers, accounts have revealed.
Clouston Group opened the Crowne Plaza Hotel 10 years ago, having built the 251-bedroom property as the first piece of a multimillion-pound regeneration scheme on a six-acre plot of land in the shadow of Central Station.
The Stephenson Quarter scheme was first launched when Clouston Group, which had previously developed Trinity Gardens and the Silverlink business park schemes on Tyneside, bought the land from a church charity in 2004. The site was later taken over by Newcastle City Council.
The Rocket office building and the Crowne Plaza hotel formed part of the first phase, along with a multi-storey car park and the Boiler Shop events space, while the second phase involved the construction of the North East Futures University Technical College.
Now newly-puiblished accounts for Clouston Group, covering 2023, show the amount owed to the council has grown to above £39m, triggering a deal which would see the local authority take over ownership of the building.
The accounts, signed off by the Clouston Group board this week, say: “The group is in negotiations with its principal lender, NCC, which started in early 2023 and continue to be ongoing to agree appropriate repayment terms, as the loan has expired. This will form part of a consensual agreement to resolve the other liabilities in all group companies which relate to this lender in return of NCC obtaining ownership of the hotel building and land held by Stephenson Quarter Developments Limited.”
The company acts as a holding company for its three trading subsidiaries – the Crown Plaza Hotel, listed on companies house as Stephenson Hotel Limited, Stephenson Quarter Developments Limited and the car park operation Stephenson Rocket Limited.
For the group as a whole turnover rose from £13.3m to £14.5m, but the previous year’s operating profit of £1.14m was converted to a loss of £2.8m. Within the accounts, the group’s Ebitda net loss of £5m included £2.36m relating to an impairment charge on the land and buildings of Stephenson Hotel Limited. It said “other additional costs contributing to the increased loss are legal and professional fees paid in relation to a court case as well as general inflationary rises impacting payroll and other costs”.
At the balance sheet date of March 24 2025 the separate hotel company had net current liabilities of £45.9m – £5.7m more than the previous year – which includes £39m owed to Newcastle City Council, up from £38.7m, relating to term loan facilities and £2m in respect of a deferred hotel funding contribution.
A report within the accounts says: “The delays in the regeneration of the Stephenson Quarter, and their ultimate design and content has created some uncertainty over the group’s ability to optimise trading performance of its operating assets. These risks were exacerbated by the impact of Covid-19 on the group’s ability to operate each of the businesses and achieve their potential.
“The group’s other principal risks and uncertainties include property values and property yields. The Crowne Plaza Hotel and the Boiler Shop are, as expected, yet to reach a stabilised basis of trading. Should trading fall below managements current forecasts, the carrying value of these assets in the balance sheet may be further impaired.
“The group is reliant on the performance of its subsidiaries in order to continue as a going concern and indicates that there is risk as going concern is dependent on negotiations with its principal lender in respect of its loan which is due for repayment as well as the the quantum and timing of future cashflows that may be insufficient to permit the group to meet its obligations as and when they fall due.”
Since its restoration, the company has operated the Boiler Shop as a cultural events venue, but it says the site has suffered from inflationary pressures. It said that it intends to expand the range and volume of events held there over the coming years.