Four hotels owned by Singapore-based Fragrance Group and operated by Bespoke Hotels have closed following an apparent communication breakdown between the two companies.
Fragrance, founded by Koh Wee Meng, one of Singapore's richest businessmen, made a string of hotel acquisitions between 2017 and 2018 across the UK, including the 141-bedroom Lyndene (pictured) and the 90-bedroom St Chads, which have now closed.
The 72-bedroom Duke of Cornwall hotel in Plymouth and the 85-bedroom Townhouse hotel in Manchester have also closed.
The impact of coronavirus restrictions on the hospitality sector were cited as making the businesses "financially unviable" by representatives of the hotels. However, a statement from Fragrance said it was "shocked" to be notified that Bespoke had made all staff redundant "without warning" at the four hotels it leased to Bespoke.
A statement from the group said: "Fragrance would like to stress that they have the greatest sympathy for all the staff and their families at this very distressing time.
"Fragrance are now forced, due to a lack of communication from Bespoke Hotels and the incorrect information Bespoke Hotels have given staff, to clarify that Fragrance have offered extensive support and worked tirelessly since the pandemic forced hotel closures to arrange a way for Bespoke Hotels to continue to operate Fragrance's properties.
"Fragrance are dismayed that Bespoke Hotels have not offered equivalent support to keep these hotels running (despite continuing to support and operate some 80 other hotels during the pandemic) and have now caused distress to numerous families without notifying Fragrance. Bespoke Hotels put forward no feasible solution to the financial issues faced by the companies running their hotels and have offered no support from the wider Bespoke Hotels group of companies."
A spokesperson for the hotels said: "It's with tremendous sadness that we can confirm the closure of the Lyndene and St Chads hotels. Industries across the country have been heavily impacted by the coronavirus crisis, and the hospitality sector has been among the hardest hit.
"With repeated enforced closures due to lockdown measures, combined with reduced revenues and additional costs caused by social distancing requirements, all of which has been underpinned by unavoidable, ongoing overheads, we're in a position where it's sadly no longer financially viable to continue.
"We've explored every avenue in a bid to stave off having to close permanently, but given the enormous financial strain of the pandemic we're at the point where this is simply no longer possible and we've had to cease trading.
"We'd like to express our immense gratitude and sincerest sympathies to the staff at both the Lyndene and St Chads, who have been enormously understanding during recent months. It is our hope that they will be able to take advantage of the Government Insolvency Service."
Bespoke added: "We extend our deepest regrets and sincerest sympathies to all those affected by this awful situation.
"As soon as the scale of the impact of the Covid-19 crisis on the hospitality industry materialised, we initiated negotiations with the Fragrance Group to try and come to a sustainable financial arrangement that would allow the four hotels to continue trading. Despite exploring all avenues across the course of many months, the devastating effects of almost a year of enforced closures, combined with an 80% drop in sales since the pandemic began, has decimated the hotels' revenues.
"With an ongoing national lockdown that still has no definite end date along with ongoing overheads we've simply been left with nowhere else to turn.
"We informed the Fragrance Group on 22 January 2021 that we had no other option but to formally appoint an insolvency practitioner, with insolvency proceedings subsequently beginning. The virtual meeting with hotel staff held on 2 February was, sadly, a necessary part of that process.
"We're extremely saddened by the impact these permanent closures will have on the hotels' staff and indeed their local communities and we have done all that we can to avoid having to do so. The hotels are fantastic businesses with loyal staff and we hope that new operators will be able to reopen them and benefit from a great British summer.
"As an organisation, Bespoke Hotels has been managing and running hotels for more than 20 years and this is the first time we've had to resort to insolvency proceedings – something that serves to underline our commitment to responsible business practices. However, the financial burden of the pandemic at these hotels has very sadly proved too much to bear."
Fragrance Group still owns at least seven properties across the UK, including Blackpool's Imperial hotel, the Crown hotel in Harrogate and Liverpool's Municipal Buildings, which is undergoing a £40m refurbishment to become a four-star hotel.
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