Administrators called in at Blue Rainbow

A Manchester aparthotel business which had an ambitious expansion strategy has fallen into administration.

Blue Rainbow Apartments, which runs 79 serviced apartments in Commercial Street and Jordan Street, Manchester, will continue to operate after the assets were sold to directors Will Hannah and Jason Abbott through a new company called City Space Hotels.

However, the group’s Edinburgh venture, which had 30 apartments, has closed down after its trading company, Blue Rainbow Hotels (Edinburgh), went into voulntary liquidation with the loss of eight jobs.

Administrators at FRP Advisory in Manchester said cashflow at the Manchester operation came under pressure after room rates were discounted to generate revenue to prop up the Edinburgh business that was struggling due to “local trading conditions”.

Blue Rainbow Apartments was marketed for sale and attracted interest form 21 parties, with six of them conducting due diligence, according to FRP which said the sale had preserved nearly 40 jobs and protected pre-paid customer deposits of around £200,000. FRP said the assets of the Edinburgh arm were being sold off as a going concern sale was not possible due to the extent of the losses.

FRP partner Ben Woolrych said: “The sale of the Manchester business and assets of Blue Rainbow Aparthotels has achieved the best result for all stakeholders especially the 39 employees, creditors and those customers who had made significant pre-payments for room hire over the remainder of 2014 which will now be fully honoured. The Blue Rainbow Aparthotels can continue to provide an attractive alternative to traditional hotel accommodation right at the heart of Manchester.

“Despite strong occupancy rates, a recent policy of discounting room rates to generate cash in order to support the turnaround of the Edinburgh business had led to operational losses for the Manchester business. These losses coupled with rises in other overheads led to severe cash-flow pressures and the subsequent sale process within administration.”

Close