New five-star Palace Hotel plan withdrawn

A proposal for a new luxury five-star Palace Hotel in Torquay is being withdrawn because changing economic circumstances mean it is no longer financially viable.

In its place are plans for new homes to alleviate Torbay’s chronic housing shortage.

The new plans for the site in Babbacombe Road include a proportion of affordable homes for local families, and are being prepared by the Fragrance Group, who bought the old Palace Hotel in 2017.

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 site on Babbacombe Road is brownfield, well connected to the road network and close to a wide range of local facilities, so it is an excellent location.”

The original 2019 plans to replace the old Palace Hotel included 37 new homes on the site, which are well on the way to being completed. The new proposals include a further 67 new homes, of which a proportion will be designated as affordable homes for local people. The proposed new development is called Palace Gardens II.

Mr Rogers said: “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 group is now preparing to discuss the proposals for Palace Gardens in more detail with the local community and a range of other stakeholders later in the year before submitting plans to Torbay Council for its consideration.