This week it was announced that the Labour run City of Lincoln council has bought the under-construction Travelodge hotel off the East-West link road.
The council is spending £13 million to buy the building and then leasing it back to Travelodge for 25 years. However, it will take over 30 years for the council to make a profit on it’s purchase, by anyone’s analysis that looks like a very bad deal.
The concept of Councils investing in local services & businesses to make a profit isn’t new and was used very well by Liberal Democrat councils before the financial crisis which allowed them to use that money to offset some of the government cuts since then.
The main difference with doing this concept well and badly is investing when the going is good and reaping the rewards when it gets tougher. The Council is doing this the opposite way around which is why it will take an astonishing 30 years to make back the money.
Another issue is that Travelodge can pull out of the contract in 25 years which could leave the Council and its taxpayers hugely out of pocket. Lincoln needs hotels, but these can and are being built by hotel chains themselves without the need for the Council to risk its resident’s money and should be encouraged with planning application support and guidance not £13 million.