Council’s hotel dream turns into a £200m nightmare
Council’s hotel dream turns into a £200m nightmare
Plus: Bid to bring beer back to football stadiums; and city bar owner crowned the world's best
Council risks £200m legal claim as its big hotel deal collapses
The city council risks being sued for more than £200m by one of its own companies as its plans to open an Edinburgh International Conference Centre (EICC) hotel disintegrate.
The local authority struck a deal to lease a 350-bed newbuild hotel at Haymarket three years ago as a means of supporting the council-owned EICC.
But, following a major downturn in the construction industry, the council and its private partners, developers M&G, are ready to pull the plug on the scheme.
That will leave the EICC facing losses calculated at more than £200m, raising the prospect of the conference centre operator suing its owners, the city council.
What went wrong? The project is largely the victim of soaring costs in the construction industry which have been several times higher than general inflation. The main contractor, Sir Robert McAlpine, pulled out of the project this summer. M&G appear to have wanted the local authority to take on a greater degree of risk in order to see the project proceed, the council was unwilling, leaving the two sides to negotiate a settlement.
But it could get worse. EICC chief executive Marshall Dallas, in board minutes seen by the Inquirer, has warned failing to build the hotel would leave the conference centre with liabilities of up to £2m a year to operator Hyatt. The EICC has been advised it may need to sue the city council to cover its losses, which would also include up to £155m in lost earnings, based on the council-approved business case for the project. That means the council risks being sued for more than £200m.
Why did the council want a hotel anyway? The council-owned EICC, which reported record profits of £12.8m last year, has lost business over an inability to guarantee hotel rooms for clients looking to book conferences more than a year in advance. Hotel operators are often unwilling to accept such bookings due to the high demand for accommodation in the Capital. The project also included a hospitality school to train new recruits to the industry.
What happens next? The city council is expected to start negotiating a settlement with M&G, while the EICC and Hyatt prepare to make potential claims over their projected losses. The one thing that seems certain at this stage is that the saga will prove profitable for a number of legal firms.
YOUR EDINBURGH BRIEFING
BEER IN FOOTBALL STADIUMS: Scottish Health Minister Neil Gray has said he will “seriously consider” lifting the alcohol ban in Scottish football stadiums. Corporate guests can buy booze - as can fans at Scottish rugby fixtures and English football grounds - but sales to regular supporters have been banned since 1980, when Old Firm supporters rioted at Hampden Park. Any proposals are likely to include restrictions, such as limiting sales to light beers, and other lower strength drinks, out of sight of pitches. The move could open up a significant income for Edinburgh and the Lothians’ six league clubs, Hearts, Hibs, Spartans, Edinburgh City, Bonnyrigg Rose and Livingston.
JOURNALISTS’ DEATH PROBE: The President of Brazil Lula da Silva has demanded an investigation into the death in Edinburgh of one of his country’s leading journalists. Nathalia Urban, 36, who had been living in Scotland, is reported to have taken her own life last week. Police Scotland has now agreed to investigate claims she had been the victim of domestic abuse in the run up to her death, the Sunday Mail reports.
SOCIAL BITE: Edinburgh’s Social Bite Village is set to move across Granton to a new waterfront site with views over the Forth. The move, planned as part of the regeneration of the area, will mean the charity can continue to support up to 16 people who have experienced homelessness to live independently.
CALTON HILL GRASS: The Calton Hill Conservation Trust has been awarded a ‘micro-grant’ by Edinburgh University to reseed the area around the National Monument. A surge in visitors has taken its toll on the popular park, but the volunteer-run trust has been told its restoration project “could have very high positive social impact.”
POUNDLAND OFF PRINCES ST: Poundland has announced the closure of its store on Princes Street as traditional high street retailers continue to struggle across the UK. Tourism and hospitality now account for most new openings on the famous street.
CHANGE ON MENU: More changes are in store for the food and drink offering at Edinburgh Airport. An expanded BrewDog bar close to gate 11 and a new Sainsbury’s store before security are in the pipeline. The existing Brewdog outlet will be replaced by a new Icons sports bar, while Sainsbury take over a unit previously occupied by M&S.
DONALDSON TRIBUTES: Tributes have been paid to Malcolm Donaldson, husband of The Gruffalo author Julia Donaldson, following his death, aged 75. A popular figure at various events in the Capital over the years, where he regularly sang and played guitar, Malcolm was also a paediatric consultant and respected academic.
HOLYROOD PARK TRAFFIC: Campaigners have been left disappointed after Historic Environment Scotland stopped short of further restrictions on traffic in its management plan for Holyrood Park. The stretch of road through the park behind Our Dynamic Earth has been included in the Capital’s Low Emission Zone (LEZ) plans as a route for city centre traffic which does not meet the LEZ requirements.
AUCTION ACE: A painting by Sir John Lavery depicting Paisley socialites at a tennis party in 1889 sold at auction with Lyon & Turnbull for more than half a million pounds. The painting by the Belfast-born “Glasgow Boy” achieved a price of £537,700 in an auction of work from the Paisley Art Institute collection. Scottish Colourist F.C.B Cadell’s stunning portrait of a woman, Pink and Gold, sold for £250,200. The total raised from the sale of works – representing around a quarter of PAI’s collection – was £1.63 million (inclusive of buyer’s premium). A sizeable portion of this figure will contribute to the ongoing effort to secure the 148-year old artist-led charity’s future.
THE BUSINESS
City spin-out has fantastic fortnight
It’s an understatement to say that it has been a positive two weeks for University of Edinburgh spin-out company MiAlgae.
First up the innovative company, which grows nutrient-rich algae from whisky waste, secured £14 million in an over-subscribed funding round which secures the finance needed to upscale its operations and production of its marine Omega-3 product, NaturAlgae.
And in the past couple of days, the company has been named amongst the three finalists for a prestigious environmental Earthshot Prize 2024. It’s production of Omega-3 helps preserve threatened wild-fish populations.
The Earthshot Prize is founded and presided over by the Prince of Wales, and winners receive a £1 million prize to continue with their work.
Douglas Martin, who founded the business while studying for his Masters in synthetic biology and biotechnology, said: “Our fish-free, circular Omega-3 solution not only benefits the oceans but also meets the growing demand for sustainable alternatives in key industries. By going directly to the source – the algae – we can protect fish stocks while offering an environmentally friendly, cost-effective product.
“The Earthshot Prize provides a unique platform to accelerate MiAlgae’s impact, and we hope to inspire others to take bold, innovative steps that protect our oceans.”
MiAlgae is a finalist in the "Revive Our Oceans" category of the Earthshot Prize, one of five categories, which focuses on solutions to restore and protect ocean ecosystems.
TARGET SMASHED: It has also been a positive week for The University of Edinburgh’s impact on business. The university has quadrupled the initial investment target set as part of the South East Scotland City Region Deal, signed in 2018, as it’s data driven innovation has helped 500 firms secure £200 million of investment in five years. The initial goal was to help more than 400 entrepreneurs raise £50m within a decade.
WINTER APPEAL: An Edinburgh-based community interest company has launched its annual appeal to help people through the winter – with the energy price cap set to rise by 10%. The Leith Collective, which operates shops selling artist and artisan made creations – hopes to re-distribute more than 10,000 free winter coats and is appealing for other businesses to get involved as collection points. Further information available at www.we-relove.com
HIGH GROWTH: The Hunter Foundation – established by entrepreneur and philanthropist Sir Tom Hunter - has launched its latest search for Scotland’s next round of potential billion-pound companies through its ScaleUpScotland 2.0 programme, which aims to provide strategic support to high-growth businesses. Participant companies must be headquartered in Scotland, with current revenues typically in excess of £10m, a record of strong year-on-year growth and the potential to achieve significant growth revenues within the next five years.
THAT’S ENTERTAINMENT
FRIENDS OF DOROTHY: Author, comedian and campaigner Sandi Toksvig is following up her last sell-out Next Slide Please tour with an evening celebrating the publication of her new novel, Friends of Dorothy. Sandi Toksvig: Friends of Dorothy comes to the Lyceum on Tuesday, 15 October.
PORTY BOOK FEST: Saltire Prize nominees Zoe Strachan and Allan Radcliffe, and Sunday Times bestseller Gareth Brown, are among a packed literary programme coming to Edinburgh’s seaside this weekend. Portobello Book Festival returns on Friday until Sunday.
POP GOES INGLISTON: One of Europe’s largest celebrations of pop culture returns to Edinburgh this weekend. Simon Pegg and Craig Charles are among the star guests at Comic Con Scotland at the Royal Highland Centre on Saturday and Sunday.
QUICK BITES
BEST BAR NONE: Iain McPherson, founder of award-winning Panda & Sons, has been named the Altos Bartenders’ Bartender 2024 as part of The World’s 50 Best Bars 2024. He was voted for by his peers for outstanding contribution. It’s another feather in the cap for Iain and the city’s thriving cocktail bar scene.
NEW CHOICE: Newcomer to Edinburgh’s dining scene Nàdair, which is situated on Roseneath Street in Marchmont, offers a daily changing tasting menu based on Scottish cuisine using local and foraged ingredients. It is a first venture between Alan Keery, who will be the restaurant's head chef, and Sarah Baldry, who will be the restaurant's pastry chef. The pair first worked together at city institution Wedgewood the Restaurant.
S-MASHED IT: Makars Goumet Mash Bar in Bank Street has been named as the best restaurant in the UK for casual dining, in the Tripadvisor Travellers’ Choice Awards. Specialising in Scottish comfort food, the restaurant menu boasts a choice of nine types of mashed potato.