Peel Hotels and Bespoke Hotels, representing several hotels in the town, are bring the action against the scheme which the council’s own officers have described as “high risk”.
The circa 320-bedroom, two-hotel and health club/spa scheme near the Bournemouth International Centre has attracted controversy through the council’s plans to fund 100% of the total £70m development costs, creating a risk-free project for the developer.
Peel Hotels, which operates the Norfolk Royale Hotel in the town, and Bespoke, which has oversight over the Hallmark Carlton and Hallmark East Cliff hotels in Bournemouth, have consulted with other local hotels ahead of their action.
The hoteliers also believe the development would add unneeded capacity to the Bournemouth hotel industry and would impact many traditional and long-established hotels, with several closures likely.
Peel and Bespoke have informed the council they have launched legal proceedings to obtain a judicial review as to how it came to its decision to press ahead with the development.
Robert Peel, executive chairman of Peel Hotels, said: “This is an unviable white elephant of a scheme. We understand the council itself estimated that its interest in the £70m development will only be worth £40m when completed – an appalling outcome for taxpayers and one that raises questions about how it will secure a PWLB loan.
“It seems that a prime motivation for the council is to build the biggest scheme possible so that it can borrow as much as possible from central government and make a profit from on-lending to the scheme.
“The big problem is that the loan needs to be repaid and that the projections have been inflated beyond the level advised by its own hotel adviser – Savills – to make it look feasible. So, as well as unfairly distorting the hotel market it’s a huge gamble for Bournemouth council tax payers.”
He added: “We are committed to challenging this scheme on behalf of all hotels and health club/spa operators in the town and this legal action is one of many options we have.”
Bournemouth council has defended the proposals agreed in February. Cllr Philip Broadhead, cabinet member for economic growth said the plan was founded on “a solid business case”, and had been subject to “due diligence and validated by leading expert in the commercial property and hotel industry”.