Fragrance drops plans for luxury Torquay hotel that’s ‘no longer financially viable’

Fragrance Group has confirmed it is withdrawing proposals for a new luxury hotel in Torquay, Devon, “because changing economic circumstances mean it is no longer financially viable”.

A spokesperson for the group also said that there was “already an oversupply of accommodation” in the area with existing businesses struggling to recruit staff. Instead, the business is exploring opportunities to turn the site into more new houses.

Martin Rogers, of Global Hotels and Leisure Consultancy, said on behalf of the Fragrance Group: “When we first unveiled the vision for a new Palace hotel with some new housing four years ago, no one could have predicted how different the world would be in 2023.

“While work on the new homes element of our earlier proposals is progressing well, it has to be said that the figures for a replacement hotel simply no longer add up. Too much has changed.

“Torbay Council has recently assessed the local hospitality industry and worked out that there is already an oversupply of accommodation. At the same time, we know that many people in the sector here are struggling to recruit enough workers. There are around 200 vacancies in hospitality in and around the Bay.

“So, Torbay is not short of hotel bedrooms, but what Torbay is very short of is homes. There is a housing crisis in the area and our new proposals will go some way to alleviating this."

The original 2019 plans included 37 new homes on the site, with the new proposals including a further 67 new homes, of which some will be affordable homes. The proposed new development is called Palace Gardens II.

The company is preparing to discuss the proposals with the local community and a other stakeholders later in the year before submitting plans to Torbay Council.

The Fragrance Group bought the old Palace hotel in 2017 as part of £100m investment plans in the area, which also included Ibis Styles and Mercure hotels in Paignton and a £23m investment into relaunching the Corbyn Head hotel, also in Torquay and expected to reopen next year. The group also acquired the Marine hotel in Paignton off a guide price of £1.5m in October.

Rogers added: “The Fragrance Group remains committed to Torbay – the new Mercure on Paignton seafront is now open and work on the neighbouring Ibis Styles, and the replacement for the old Corbyn Head hotel in Torquay, are progressing well.”

The property company also plans to transform Bath's Grade II-listed Royal Mineral Water Hospital into a luxury hotel following a refurbishment.

Its wider portfolio includes the St Chads, Imperial and Lyndene hotels in Blackpool; the Crown hotel in Harrogate; the Aloft Liverpool hotel with plans to convert the city’s Municipal Buildings into a four-star hotel; and the Townhouse hotel in Manchester.