Buyer sought as Glasshouse Hotel's group falls into debt

A TOP hotel which has accommodated celebrities such as Annie Lennox, Meryl Streep and Kylie Minogue has gone into administration, it was revealed yesterday.

The Glasshouse boutique hotel beside Edinburgh's Playhouse Theatre is one of five UK hotels now up for sale following the collapse of the Eton Collection group. Three further hotels in London and one in Leeds have also been put on the market.

The five-star hotel in Greenside Place, which opened in June 2003, has 69 bedrooms and boasts a rooftop terrace, which looks out over Edinburgh, the Forthand Calton Hill.

It was recently voted by Cond Nast Traveller as one of the top 50 "hottest" hotels in the world. It has also claimed the title of 'Most Stylish Hotel' by the Scottish Style Awards and 'Sexiest Hotel in Scotland' by Hotel Review Scotland in the past.

Jane Moriarty and Allan Graham at KPMG were appointed joint administrators to the Eton Group and the affected properties yesterday afternoon.

No immediate redundancies have been made and the hotels are to continue trading while a buyer is sought.

Ms Moriarty, a restructuring partner at KPMG, said: "We are continuing to trade the business while we assess the position of the hotels. Historically, however, the hotels have traded successfully and are well regarded at the luxury end of the market, so we are hopeful of securing a successful resolution to this situation."

The hotels employ around 250 staff.

A spokeswoman for KPMG was unable to say how many people are employed at the Glasshouse on Edinburgh's Greenside Place.

It employed 52 staff during 2008, the last year for which company accounts are available.

The contemporary building at the foot of Calton Hill is built behind the faade of the 150-year-old Lady Glenorchy church.

Its top-end rooms boast private Jacuzzis and saunas, as well as balconies overlooking a lavender-scented rooftop garden.

However, the hotel plunged into the red in 2008, its latest set of accounts filed with Companies House show.

It notched up losses of 154,583 that year, compared with profits of 1.66 million during 2007. Turnover fell by 5 per cent to 3.5m as the economic downturn hit bookings.

"As a result of the difficult trading conditions during late 2008 and subsequently, the company's intermediate parent entity, Eton Group Holdings, is in breach of its banking covenants," the accounts said.

"The group has successfully negotiated a waiver over the loan to value covenant until 30 June 2011 and the bank has not invoked its right to require part repayment of the loan with regard to the loan to profit covenant."

However, the group yesterday lost its battle to remain afloat due to its "debt burden", said a KPMG spokeswoman.

She added: "Many companies that have gone under during the downturn have been in some form of debt distress, and that is true in this case."