Newport's flagship Mercure hotel could close by Christmas 2027 unless a long-running dispute over ground rent is resolved, according to the developer behind the city-centre landmark.
The warning comes amid a row between Andrew McCarthy's company, Garrison Barclay Estates, and Newport City Council over future payments linked to the Chartist Tower site.
Garrison Barclay Estates is the development company responsible for the regeneration of Chartist Tower, which was converted from offices into the Mercure Newport hotel, alongside retail and commercial units.
At the centre of the dispute is a ground-rent liability of £316,800 a year, due to begin after the current rent-free period ends.
The developer argues the arrangement is no longer commercially viable and has sought a further extension to rent-free arrangements together with changes to future rent payments.
Mr McCarthy claims the uncertainty is already having consequences for the business.
In correspondence seen by the Argus, he says key and experienced members of staff have left because of uncertainty over the hotel's future and concerns about job security.
He has warned that further delays could make the situation increasingly difficult for the business.
Mr McCarthy says that following the appointment of consultants to examine his latest proposal, he was led to expect a decision by the end of July.
He has argued that he received assurances during July that the council's consideration of the proposal remained on track and that a decision was imminent.
However, the council says no such deadline was ever guaranteed.
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In a statement issued to the Argus, a spokesperson said consultants had been appointed to advise on the developer's latest proposal, which includes a request for a further reduction in rent and an extension of rent-free arrangements.
The council acknowledged that the possibility of completion by the end of July had been discussed but said it was only an estimate.
"When the general manager pressed us for a timescale on this work, we suggested it might be done by the end of July but this was not guaranteed. It is expected that it will be completed imminently," a spokesperson said.
The authority said it had worked closely with Mr McCarthy since 2017 and had already provided substantial support to the development, including a ten-year rent-free period, grant funding and what it described as a generous loan.
The council also disputed one of the developer's central claims, stating there had never been any agreement for a council loan to convert into a grant.
"To date, he has not repaid the loan and there was no agreement or condition, nor has there ever been, that the loan would be converted to a grant in 2027," they said.
The authority further revealed that Mr McCarthy had sought additional financial support on more than one occasion during the past two years and said it had a duty to protect taxpayers from unjustified financial risk.
The council also rejected claims that consultants involved in the review had been instructed not to communicate directly with the hotel owners.
Mr McCarthy maintains that without a satisfactory resolution the hotel's future remains at risk and says uncertainty surrounding the dispute is already affecting operations and staff retention.
The council says discussions remain ongoing and that a conclusion to the latest review is expected "imminently".
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