Loan was only way new Hilton would be built, says LEP
THE Leeds City Region LEP said that without its £4.8m funding, the new five-star Hilton hotel in Leeds would have been stalled indefinitely.
Yesterday, the Leeds City Region Local Enterprise Partnership (LEP) approved the funding for the Leeds Arena Hilton Hotel. The money has been allocated from its £36m Growing Places Fund (GPF), which provides loans for projects that will create economic and employment growth for the city region.
After the announcement, some observers questioned the use of public money for a private project, however, Sally Hinton, Leeds City Region project manager for the GPF, said that although hotels are not in one of the LEP’s priority sectors, the LEP board discussed the strategic importance of this project last year and agreed that it should be considered for support, due to its prominent position in Leeds city centre, close to the new arena and due to the fact that it would create jobs and apprentice posts.
“GPF was set up by the Government to kick-start stalled projects. This hotel project was started in 2007 and had stalled as it needed to find a source of ‘junior debt’ to allow the release of the larger ‘senior debt’ (provided by a major bank) to fund the bulk of the build costs.
“In the current climate, many lenders are averse to providing junior debt as this is perceived to carry more risk. The GPF loan will pay for initial works and site infrastructure. Without the GPF loan the project could not have made a start on site and would have continued to be stalled indefinitely.”
The £32m five star hotel is to be developed and owned by Wakefield-based GB Group and it is anticipated that over 100 long-term jobs will be created when the hotel is up and running in 2015, with the potential to create 370 short-term jobs, primarily in the construction sector, through the development of the site.
Hinton added: “The applicant (GB Group) provided independent evidence that there was unmet demand for this type of hotel provision in Leeds. The GPF has provided a £4.8m loan to the project. This is secured, has to be repaid and interest is charged.”
Officials at the Leeds City Region LEP said it believes the project will benefit the construction sector, creating short-term jobs and when the building is completed, long-term jobs and apprentice posts.
“Overall, this new building will boost the Leeds City Region economy and will contribute to business rates, as well as providing ‘high end’ accommodation for conferences and visitors coming to spend time (and money) in the area,” Hinton said.
The Leeds City Region LEP said that a number of people will benefit from the project, including the local construction industry and supply chain. It said local people will gain employment in the hotel, when it is built, including eight apprentices and said the hotel aims to be ‘low carbon’ providing trolleybus information rather than car parking spaces.