A Grantham hotel that opened six months ago claims it is losing money with just ten per cent occupancy.
Now, the owners of the Willows Mews Hotel on Huntingtower Road have applied to South Kesteven District Council to change its use to 20 apartments.
The hotel opened only last June after a battle with councillors, who overturned planners recommendations to approve the hotel over privacy fears concerning the children at nearby Huntingtower Community Primary Academy.
Upper floor windows were made obscure to protect the privacy of children and the application was granted in 2016.
However, the application from Mr & Mrs S Ballaam of Cliffe Lane, Marston, says as it operates now, the hotel is making “substantial” losses.
The couple had sought to run the hotel as serviced apartments, believing there was a unfilled demand for businesspeople and contractors needing longer stays with kitchen facilities.
But despite favourable reviews, the hotel claims “disappointing” occupancy rates of ten per cent, with a fully-equipped southern half of the hotel never being used.
The application said Grantham area hotel rooms appear to be “competitively priced” and the hotel “cannot profitably compete with other operators.”
It continued: “The hotel business simply cannot be sustained and is likely to close.”
The report noted full occupancy would yield a revenue of £36,000 and the predicted 50-60 per cent occupancy would yield £18,000-21,000 a month, sufficient to meet the running and borrowing costs and leave a “modest surplus.” The current 10 per cent occupancy was missing these fixed costs “by a substantial margin.”
The proposed residential use, with a mix of self-contained bedsit, one-bed and two-bed apartments, managed by the hotel owners, would if fully occupied, generate a return equivalent to 20 per cent hotel occupancy and enable costs to be managed and the debt to be serviced over a longer period.
The level of profit means ‘affordable housing’ on the site would be uneconomic, but instead, the applicants, who are a private landlord, would be willing to offer a property in George Street as a privately-managed affordable housing unit with four individually-let HMO rooms.
The application concluded hotel has proven unviable and residential use would fit in with the area and though on-site afforable housing is not appropriate, an alternative has been offered.