Hotel still has eye on Caltongate

Published on Friday 3 July 2009 10:00

A FIVE-star hotel chain has insisted it still wants to move to the Caltongate site despite the multi-million-pound project being up in the air.

French hotel operator Accor struck a deal with former Caltongate owners Mountgrange in 2007 for the 205-room facility.

The plans for the hotel, under the company's deluxe Sofitel brand, were hailed as "visionary and ambitious" and "a must" for Edinburgh by business leaders.

But the deal was effectively ripped up earlier this year after Mountgrange plunged into administration, putting doubts over the Caltongate scheme.

When contacted by the Evening News, Accor has not been willing to discuss whether it still intends to move on to the site and property insiders say it has been on the lookout for alternative locations.

However, administrator Deloitte recently held a meeting with Accor to discuss its interest in the site and said the company still wanted to locate there.

John Reid, joint administrator at Deloitte, said: "We have spoken with representatives from Accor, who have confirmed that they are still keen to go ahead with the hotel development.

"We remain in contact with Accor and will be continuing discussions."

However, it is understood that Accor is still looking at other potential sites in Edinburgh that it might move to instead if there are no signs of a buyer coming forward for Caltongate.

Former Mountgrange directors Manich Chande and Martin Myers have raised 300 million to spend on sites across the UK where the developer has gone bust and Caltongate is thought to be at the top of their wish list.

But Bank of Scotland, which Mountgrange owes 73.8m, is thought to be keen to hold off on a sale of the site until the market improves.

One property insider warned that if there is a substantial delay before Caltongate goes ahead, Accor could walk away.

He said: "They are not bound to this deal any more. They have been given the option to walk away at any time because of the administration of Mountgrange. The truth is that within Edinburgh they will find it difficult to find another site that suits them."

Ron Hewitt, chief executive of Edinburgh Chamber of Commerce, said it remained unknown whether anyone will be able to find the money to buy Caltongate.

He said: "The problem is funding and the situation with that hasn't moved much. People don't have the cash at the moment."

Stewart Taylor, a director of business space at property firm CB Richard Ellis, also said a developer might find it difficult to get funding for the Caltongate site. "Hotels, by themselves, do not make schemes fly," he said. "It is more commercial and retail usage that generates the real value.

"On a site like Caltongate, the hotel is a relatively small part of the scheme in terms of value."