A council could turn its £10.2 million loan to a city centre hotel into an ownership stake in order to secure its future.

Stoke-on-Trent City Council has lent millions of pounds of taxpayers' money to the company running the Hilton Garden Inn, Hanley, since 2017.

Cabinet members have now approved measures allowing the council to restructure its financial involvement in the hotel.

The council will be able to turn the debt it is owed by Genr8 Smithfield Hotel Ltd into equity, as well as having the option of injecting further capital funding.

Council leaders believe this will be the most effective way of 'preserving value' while also securing the hotel's long-term future and protecting the city's wider economic interests.

The cabinet approved the measures during a behind-closed-doors meeting this week.

A council spokesperson said: "The move will protect a key city centre asset and support the continued regeneration of Stoke-on-Trent.

"The Hilton Garden Inn was originally developed as part of the wider Smithfield regeneration programme to address a recognised shortage of high-quality hotel accommodation in Stoke-on-Trent.

"Today it remains an important part of Stoke-on-Trent's economy, supporting business travel, tourism, conferences, events and local jobs."

Smithfield developer Genr8 and the council – then under City Independent-Conservative leadership – announced plans for the Hilton Garden Inn in 2017.

Council leaders initially agreed to provide a £4.55 million loan, which increased by £2.3 million in 2018 as the hotel's construction costs rose.

The 140-bedroom Hilton Garden Inn finally opened its doors in autumn 2020, right in the middle of the Covid-19 pandemic.

In 2024, the council's current Labour administration agreed to further increase the investment by an undisclosed amount, with leaders noting the difficult trading conditions faced by the hotel since opening.

According to the council's accounts, the value of the loans to Genr8 Smithfield Hotel Ltd stood at £10.15 million in March, up from £9.6 million in 2025.

Genr8 Smithfield Hotel Ltd's latest accounts show that its net liabilities increased from £3.43 million to £4.58 million last year, with long-term borrowing increasing to £19.4m.

North Staffordshire hotelier Jeff Nash, owner of the Lymedale Suites Aparthotel and Potbank Hotel, has long been concerned about the council's increasing loans to Genr8, having had first-hand experience of the challenges facing the hospitality sector.

He believes turning debt into equity is the right decision, but warns that the council will need to use its control positively to turn the hotel's fortunes around.

Mr Nash said: "This is the right direction and the council deserves credit for facing it. But people should understand what a debt-for-equity conversion is. It doesn't recover the money. It recognises that the money wasn't coming back as debt. The loss happened some time ago; this is the moment it gets acknowledged.

"What it does buy is control. The council has carried the risk on this hotel since 2017 without owning any of it — subordinated behind the bank, no equity, no say in how it's run. If it now takes ownership to match the risk it has been running, that's progress.

"Whoever ends up owning the hotel should also be realistic about the outlook, because it isn't going to get easier. Aside with the wider problems facing Hanley, new post-Covid working patterns that have decimated business demand, the national living wage and employer national insurance rises, business rates have gone up."

Mr Nash believes the Hilton Garden Inn brand may have been the wrong choice for the hotel, given its location. He urged the council to talk to other hotel operators in the area in order to gain a better understanding of the local hospitality industry.

Genr8 has been approached for comment.