Jobs lost as iconic hotel set to close

By william telford business editor

DEVONPORT'S iconic Royal Fleet Hotel is to close just 18 months after being bought by a millionaire businessman who promised a multi-million-pound makeover.

The 110-year-old building has been sold to an unnamed buyer by Midlands-based Kailash Suri, who also owns Plymouth's Reel Cinema.

The hotel will shut on June 22, and its 18 staff are believed be looking for new jobs, although Mr Suri, who broke the news to workers personally at a meeting this week, said he hoped to re-employ several within his other business interests including the Reel Cinema chain.

Meanwhile, dozens of events booked into the hotel have had to be cancelled.

Industry sources told The Herald as much as £1million of businesses may be on the hotel's books.

Staff have been frantically re-arranging events such as weddings, birthdays and anniversaries with other Plymouth hotels.

Mr Suri said: "It's unfortunate. I apologise if it has created any inconvenience for anybody.

"We have rung everybody up. We have associations with other hotels."

The businessman bought the Morice Square building in December 2008 in a deal thought to have been just under £1.5million.

The next month, the entrepreneur told The Herald "a seven-figure sum" would be spent on transforming the hotel.

But yesterday, he said the enterprise was losing money and he feared the knock-on effect this would have on his other business interests and 500 employees.

He said: "I'm very sad. It's with great regret. This is the first time I have closed a business.

"It was losing money drastically. When I bought it, the financial side was different, and the market changed radically.

"It was having a knock-on effect on my other business.

"I lost a significant amount of money in 18 months."

Mr Suri said he had taken the view that the business could be successful in three to five years' time, but hadn't expected the market to "go so drastically wrong".

He said that while the hotel was proving popular, with sources saying it was attracting up to 15 events a month at the busiest times, the bookings were not paying well.

He described the bookings as "low end" and said: "The value is not there. Devonport is away from the town. We had to discount, give special prices."

Mr Suri, who runs 3R Construction and Property Development, declined to reveal the sale price of the building or its new owners.

Industry sources told The Herald it was not a hotel firm, but Mr Suri did not confirm this and said: "They will be making their own decision as to what they are going to do."

The hotel has 50 en-suite bedrooms, a 60-cover restaurant, two ballrooms and various bars and conference facilities.

When The Herald contacted hotel staff, they declined to comment.

The building was founded in 1853, and for years been based in Duke Street, as the Devonport Sailors' Home.

Construction on the current premises was not completed until 1902 after the Morice Square site was purchased in 1900.

The building survived a direct hit from a German bomb in 1940 and became a refuge centre for families whose houses were destroyed in the Blitz.

In 1949, its name was changed to the Royal Fleet Club.

It was run as a charitable trust, but in February, 2008, with donations dwindling and legal guidelines preventing refurbishment, the trustees were forced to place the building on the market.