Council accused of conflict of interest over hotel holdings amid short term lets row

Questions over ‘for profit’ interests in hotels across Edinburgh

The City of Edinburgh Council has been accused of a “clear commercial conflict of interest” in its crackdown on short term lets while maintaining a significant financial interest in hotels across the capital.

Supporters of the new regulation scheme argue it will help tackle the city’s chronic affordable housing shortage and provide stability and security for communities, but the plans are coming under increasing criticism from those in the self-catering sector, who have expressed concern at the council’s own commercial dealings.

Louise Dickins, managing director of Dickins Edinburgh, which lets self catering accommodation in the city, said there were key questions to be asked around the local authority’s decision to enter into a deal that will see Hyatt open its first hotel in Scotland via a franchise agreement with the Edinburgh International Conference Centre (EICC). The EICC is owned by a subsidiary holding firm of the council.

Only last week, a report came before councillors forecasting that the city could see an 80 per cent drop in properties for hire on Airbnb when the licensing scheme for short-term lets comes into force. The paper, prepared for the council’s policy and sustainability committee, said that there was “an assumption of an 80 per cent reduction” from the 2021 number of active listings reported on the site “as a proxy for the size of short-terms lets”.

Ms Dickins, who is also a director of the Association of Scotland's Self-Caterers, said there should be greater scrutiny of the council’s own financial stakes in hotels and other accommodation providers. “The council owns the EICC which makes a loss every year, and the hotel idea is to plug the losses,” she said. “This a for-profit undertaking, it’s not a charitable undertaking, and they came up with this idea at the same time as they decided to wipe out the competition with the short term lets scheme.

“It’s an absolutely clear commercial conflict of interest, but they don’t seem to be able to see that. No one has acknowledged it.”

The 349-room Hyatt hotel, which is scheduled to open in 2025, is not the only hotel in which the council has a stake. Edinburgh is one of several local authorities across the UK to have joined forces with Travelodge, whereby councils purchase or build property before leasing it to the hotel chain. The Travelodge in Ratho is one such property.

The City of Edinburgh of Council has been accused of a clear commercial conflict of interest over the short term lets scheme. Picture: Scott Louden

The local authority, which has a commercial property portfolio worth around £245 million, has also been accused of hypocrisy for allowing its former headquarters on High Street to be redeveloped into holiday let apartments.

The council has defended the Old Town Chambers development, arguing that it is not taking homes off the market, but the deal has sparked anger. Last month, Ralph Averbuch, who runs several self-catering units in the city, told the Edinburgh Evening News that the council was acting as “judge, jury and executioner”.

But James Dalgleish, convenor of the council’s planning committee, said: “I see no conflict of interest here. We are talking about developments which are clearly positive for the sustainability of Edinburgh as a well-managed destination. They aren’t covered by the legislation introduced by the Scottish Government, so comparisons to the short term lets sector are irrelevant.”