The operator behind one of Newport’s flagship regeneration projects has warned its award‑winning city‑centre hotel could be forced to close because of a long‑running dispute with Newport City Council over historic ground rent.
Garrison Barclay Estates, which redeveloped Chartist Tower into a four‑star Mercure hotel with offices and retail units, says a 250‑year commercial ground lease set when the building was a department store and offices no longer reflects “the economic reality” of running a modern hotel‑led scheme.
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The company says it has spent nearly three years trying to renegotiate the ground rent, submitting a detailed business case drawn up by consultants Carter Jonas at the council’s request and offering to share a full timeline of correspondence.
Director Andrew McCarthy said the current annual ground rent of around £315,000 was set on the basis that prime shops and offices in Newport would command six‑figure rents, but that market has shifted dramatically.
He pointed to a new Barclays branch paying about £30,000 for a unit that would previously have rented at £150,000 a year, and a coffee shop in Chartist Tower let at £2,500 instead of the £25,000 once considered realistic.
The developer says it has heavily discounted retail and office space simply to keep units occupied and avoid more empty frontages in a city already battling high vacancy rates.
At the same time, the Mercure hotel is trading at around 80–100 per cent occupancy but at room rates Mr McCarthy describes as “far below” original projections, as wider regeneration around Newport city centre has failed to materialise.
He says the hotel’s revenue per room has been squeezed by competition from Cardiff and Bristol, while costs such as wages and utilities have risen by hundreds of thousands of pounds since 2023.
Despite this, the ground rent has not been reset. Mr McCarthy claims Welsh Government previously encouraged the council to get round the table to find a commercial solution and that specialist advisers Rockingham, who work with other authorities on “toxic” ground leases, offered support at no cost but the council declined to engage.
The developer warns that unless the lease is re‑geared, the hotel could ultimately close, with no guarantee another operator would take it on. They say around £10 million a year of economic activity, roughly 70 jobs and 11 subsidised retail units linked to Chartist Tower could be at risk, and that a future owner might instead look at uses such as asylum accommodation or social housing.
A spokesperson for Newport City Council said:
"Newport City Council has provided considerable financial support to the developer in relation to Chartist Tower.
"It is also owed significant sums of money as, to date, the developer has not paid the interest on the council-provided loan in line with the agreement.
"Over the last two years, the developer has approached us for even more financial support on more than one occasion.
"The council has consistently refused despite “warnings” that the hotel would be closed if it did not give in.
"The developer has recently approached us again with yet another proposal and this is being considered.
"However, taxpayers’ money is precious, and we have a responsibility to ensure that we don’t just hand over public money unless there is a clear business case which provides a clear benefit to the city. At all stages, the appropriate due diligence is undertaken.
"All the evidence shows that the hotel is thriving and attracting thousands of guests. New businesses have also opened in Chartist Tower in the last 12 months."
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