Steel Magnate Moves Into Hotels in Scotland

Main Photo: The Liberty Steel Dalzell Works at Motherwell, Scotland

Date: January 2020

Location: Initially Clydebridge, South Lanarkshire, Scotland, UK

Name: TBA

No. of Keys: 100

Owner: The industrial giant which rescued the last two steel plants in Scotland has revealed details of its plans to build a £15 million hotel at its Clydebridge site in South Lanarkshire, while declaring its ambition to develop similar ventures at other locations in the UK.

The property development arm of Sanjeev Gupta’s GFG Alliance, whose Liberty Industries Group acquired the Dalzell and Clydebridge plants in Lanarkshire in 2016, is working up a detailed planning application for a 100-bedroom hotel at the location to the east of Glasgow, after the local authority gave change of use consent for the land from its industrial status.

It will be the first hotel to be developed by GFG’s JAHAMA business. And the division’s chief executive, Dilip Awtani, revealed it could follow the template at other sites owned by the company, including the estate where its aluminium smelting facility is based in Fort William.

JAHAMA aims to submit a detailed planning application for its proposed Clydebridge Hotel at some stage in the second quarter. It proposes to include a large fitness club and restaurant in the development, with the intention of encouraging local people to use the facilities, as well as hotel residents.

JAHAMA, which is also considering separate plans to develop office space and storage units on the land it owns around Clydebridge, expects to create around 50 jobs with the hotel development. It reckons it will support even more jobs indirectly.

Mr Awtani highlighted the firm’s hope to take advantage of the extensive regeneration which has taken place in the east of Glasgow in recent years, including the construction of the Emirates Area and Sir Chris Hoy Velodrome, constructed ahead of the 2014 Commonwealth Games, and the redevelopment of the area around Celtic Park.

He also pointed to the potential demand created by successful Clyde Gateway project, which has led to the creation of significant business facilities, and the site’s convenient location for the M74 motorway.

Mr Awtani said: “The communication link with the highway, the M74, is really good. But not only that, if you look at the entire regeneration of the east of Glasgow area… you have got plenty of potential for new offerings coming to the area.”

JAHAMA is working with architects and consultants to draft up detailed plans. Mr Awtani said key decisions, such as whether to lease the hotel to a third party or award a franchisee to run the destination, have still to be made. The hotel, fitness club and restaurant may ultimately be run under a well-known brand to help forge their appeal to consumers.

Mr Awtani said: “We are keeping our options open right now, and we are looking at different ways of making this operation available to others who want to operate on the site.”

Asked to how much he expects JAHAMA to invest in the project, he said the outlay could be up to £15m, depending on the ultimate specification of the hotel.

And Mr Awtani said the firm could apply the experience at Clydebridge to other sites in the UK, including Fort William where GFG acquired the UK’s only aluminium smelter, as well as a hydroelectric station, in 2016.

He said: “Whatever we do on this site will then potentially also determine what we do on other sites. It might be a replication of the same model, [or] it might be a slight variation of it. “But we have several sites in the UK earmarked for hotels, which is roughly around five. We do imagine very similar offerings across the entire portfolio in the UK.”

Mr Awtani added: “Fort William is a hotel market which is very contested. It has high occupation levels and good average room rates to support more operators in the future. We have not earmarked a site yet for an operation in Fort William.”

Details of the Clydebridge project emerged after a report published by Liberty in December said the two Scottish steel plants are on course to produce 75,000 tonnes of steel plate this year. Employee numbers at the plant have dipped to 145 from 187. The report states that Liberty, which is run by Scot Douglas Dawson, has plans to move into wind tower manufacturing at Clydebridge. Liberty said it has invested £500m in its Scottish assets since 2016.

Price: £15m

Price per Key: £150,000

THPT Comment: Interesting move in the same wekk that Nicola Taylor, CEO of Glasgow-based Chardon Trading, owner of six branded hotels in Glasgow, Edinburgh, Perth and Dunfermline says “the hotel industry is facing a challenging future because of an over-supply of rooms, as the firm reported a steep fall in profits for its most recent financial year.

She also said the glut of hotel development in Glasgow city centre is making it increasingly difficult for operators to compete.

And she declared Glasgow’s success in attracting major events, which provide hoteliers rare opportunities to charge full prices, is masking the underlying trend of lower-room rates driven by the increased competition.

Figures released by Glasgow City Council in 2019 revealed there were 22 hotels in the planning pipeline, a figure likely to have increased in recent months after plans were disclosed for yet more projects in the city. These include plans for hotels in the former C&A department store on Sauchiehall Street, and in the Teacher Building on St Enoch Square.

The projects in the planning come on top of the 1,050 rooms added to the city over the course of 2017 and 2018.

First Seen: Herald Scotland

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