Cash-strapped Stoke-on-Trent City Council has increased its multi-million pound investment in a hotel – to help secure its long-term future.

The city council has previously provided £6.9 million in loans to support the construction of the Hilton Garden Inn, part of the Smithfield development in the city centre.

Council leaders have now agreed to increase the investment in Genr8 Smithfield Hotel Ltd – the company that runs the hotel – in a behind-closed-doors meeting. They say that while the hotel has a good outlook in the medium to long term, since opening it has had to contend with the Covid-19 pandemic and rocketing interest rates – meaning there is a need for more financial support from the council.

But the council's decision comes as it faces intense financial challenges of its own. Earlier this year the government agreed to £42.2 million of 'exceptional financial support' (EFS) for the council – effectively giving it permission to borrow that amount in order to balance its books. In March councillors voted through another £8 million in cuts and a 4.99 per cent tax hike – council chiefs had previously warned that without the EFS they would have had to cut 'pretty much everything'.

Councillor Alastair Watson, cabinet member for financial sustainability and corporate services, defended the decision to lend more money to the Hilton operator. He said: "We have a world-renowned brand in Hanley with the Hilton, which anchors the city centre as a visitor destination and serves as an attraction for further investment which benefits all of us. It was put in place by a mixture of public and private investment.

The council previously provided nearly £7m to support the construction of the hotel (Google).

"The hotel opened as the world closed with the Covid lockdown. It has since faced sharply increasing interest rates. Both of these factors have affected the short-term element of the business model despite a strong number of bookings at key times of year and a good medium to long-term outlook.

"Despite the challenging financial situation faced by the council, there is a need to increase the level of investment to secure the position of the hotel into the long-term."

Manchester-based Genr8 Developments and the city council, which have been working together on the Smithfield scheme, announced plans for the Hilton Garden Inn in 2017. The council initially agreed to provide a £4.55 million loan for the hotel, which was increased by £2.3 million in 2018 in order to meet the project's increased costs.

Construction of the hotel was affected by the collapse of main contractor Pochin and the Covid-19 pandemic, but the Hilton Garden Inn opened its doors in autumn 2020. The eight-storey building has 140 rooms, along with a gym and restaurant.

Council leaders have now agreed to increase the investment in Genr8 Smithfield Hotel Ltd (Nub News).

According to the city council's most recent accounts, the authority's loans to Genr8 Smithfield Hotel Ltd stood at £8.64 million at the end of March 2023.

The cabinet's decision to increase the council's investment was taken during a closed session due to it involving 'exempt' information relating to a person's financial or business affairs. According to the minutes of the meeting, cabinet members were given 'a detailed analysis of the proposed additional investment in Genr8 Smithfield Hotel Limited', and subsequently approved the proposed investment strategy.

A spokesperson for Genr8 Smithfield Hotel Ltd said: "The Hilton Garden Inn Hotel in Stoke-on-Trent brings quality hospitality to the area, and has demonstrated resilience despite opening in a challenging climate. We welcome any further investment to ensure its long-term future for the benefit of the broader community, encouraging businesses and visitors to continue to view Stoke as an attractive destination to work and explore."

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