The independent arbitration panel empowered to reduce or uphold commercial rent arrears during the Covid-19 pandemic has reduced the London Docklands Hilton Hotel’s protected rent debt from around £3.3m to £500,000.
The 200-page-long decision is the result of more than a year of arbitration between the hotel and freeholders the London Borough of Newham. As well as being one of the most complicated and drawn out Covid rent arrears arbitration to date, it is also the biggest rent reduction.
According to the decision, the arbitration was complicated both by the hotel going into administration due to rent arrears and the fluctuating cost of energy during the course of the proceedings, which had a direct impact on the hotel’s profitability.
Despite trading under the Hilton brand, the hotel is privately owned and is a member of the Hilton franchise.
Although the rent liability has been significantly reduced, the hotel still owes £1.9m of rent arrears that were not subject to the statutory protection. In addition, according to the ruling, the council holds a rent deposit of £2.3m.
The arbitrator Janet Bignell KC found that the business remains viable and will most likely be able to meet its future obligation and continue trading.
It made a 2022 profit of almost £1m and is forecasting 2023 and 2024 profits of £500,000, the arbitrator said. The business is hoping to come out of administration.
She said that the hotel should pay the arrears in six equal instalments between September 2023 and December 2024.
London Dockside Limited (in Administration) v Mayor and Burgesses of the London Borough of Newham
Falcon Chambers Arbitration (Janet Bignell KC FCIArb) 17 May 2023
