News has emerged surrounding the recent purchase of Stoke Place Hotel, with the former owner and operator of the 39-bed boutique revealing that a ‘sharp fall’ in wedding bookings and falling room occupancy rates contributed to its misfortune.
Insider uncovered that the business came under ‘increasing financial pressure’ following a sudden decline in wedding bookings in 2014, combined with a lack of bedroom occupancy.
Rachael Wilkinson and Matthew Callaghan of PwC were appointed joint administrators of Stoke Place Hotel Ltd in November 2015.
It was then sold to Cairn Hotel Group for £3.9m, as reported by Boutique Hotelier last week.
Despite the bookings and occupancy issues, the management at the time promised to address these problems with the support of the company’s major creditor HSBC, and so set about developing a turnaround plan.
However, while Stoke Place experienced a ‘substantial increase’ in wedding bookings compared with 2014, administrators said the hotel was still unable to achieve the occupancy, event and food and beverage revenues targets outlined in the turnaround plan.
The bank continued to support the company throughout the attempted turnaround of the business by increasing its overdraft facility. In the period from October 2014 to August 2015 alone, the overdraft had been increased from £2.25m to £3.75m.
However, given the trading performance of the business during this period and "failure to deliver against the turnaround plan", the bank was unwilling to provide further additional funding.
Immediately following the appointment of administrators, a sale was agreed to a subsidiary of Cairn Group for £3.9m.
According to the administrators’ report, HSBC was owed £14.2m and is expected to suffer a shortfall.