CONCERNS have been raised about Bournemouth council's "high risk" investment in a multi-million pound hotel project.

Much of the detail of the scheme, sited next to the Bournemouth International Centre, has not been publicly revealed, with the council claiming such information is commercially sensitive.

However the Echo has been contacted by sources in the town hall and related industries with figures and concerns that "naivety" could lead to the borough building a white elephant.

Sources suggest the borough is planning to invest as much as £70 million in the scheme, borrowed from the Public Works Loan Board, and hopes to make as much as £1 million-a-year income.

The plan, as discussed by the council cabinet in November, would be for the council to fund the construction of the hotel on the site comprising the former Winterbourne Hotel, Georgian Hotel and Beacon Road car park.

A private operator would run the hotel "under a full repairing and insuring lease", and the council would collect rent to pay off the loan and contribute to its ongoing budget.

A report by council head of property Gary Platt says: "Development of a quality hotel on the vacant site adjacent to the BIC is the next step in Bournemouth's regeneration journey.

"By the council funding this scheme, it will ensure that it captures the financial benefits of the town's renewed economic prosperity as well as delivering the wider socio-economic benefits of regeneration."

The council plans for the scheme to link to the BIC, making it a more appealing conference venue.

The report lists the plan as "high risk" but states that the risks "are explained in the confidential part of this report".

A town hall source contacted the Echo with concerns about the scheme, warning that the council was "gambling with taxpayers' money to fund a risky project with one operator who is taking on no risk".

"This is a project most in the hotel industry in Bournemouth think is going to struggle," the source said.

"The council has no experience of running hotels. I think they are being hoodwinked.

"Is it right the council is taking on this kind of risk to compete with the private sector. Quite a lot of councillors are concerned about it."

The source said the town's hoteliers believe the projected profits of the scheme do not add up.

One industry figure told the Echo the income the council had projected was "well in excess" of what was likely, and "every year their costs will go up".

"It will have come from some supposed industry expert, they get this stuff wrong all the time," the source said.

The council declined to provide more information to the Echo about the scheme's cost, projected income or the identified risks.

However it said steps had been taken to limit the risk.

Roger Ball, director for development services, said: "We have a team of internal and external experts who are strenuously vetting the business case for the hotel development in an effort to ensure that the investment is affordable, prudent and sustainable before any final recommendation is made to proceed.

"The security of any investment made by the council is paramount and the majority of council capital projects are classified as high risk principally because of the large sums of money involved."

Councillor Philip Broadhead, cabinet member responsible for economic growth, said a recommendation on a preferred operator would be made to cabinet "within the next two months".

"Like many local authorities across the country, Bournemouth is using its advantageous funding opportunities to create a portfolio of income generating assets which could make a significant contribution to the protection of frontline services," he said.

"We are also using these opportunities to drive forward growth in both our economic and tourism sectors.

"The site in question has been standing empty and forlorn for some time, and indeed part of the site was gifted to the council on the proviso that a new hotel be constructed to replace the old Winterbourne Hotel.

"After taking advice from independent experts, we are confident the construction of a new quality hotel here will help drive significant improvements in Bournemouth’s economy, whilst also providing a sound investment for the council and helping to enhance the town’s conference and tourism offer.

"Following revised bids from the market, we have evaluated a number of proposals and are working with bidders to confirm the precise detail of the proposals which will be put forward.

"We have a team of internal and external experts who have evaluated each business case, which of course includes detailed risk mitigation measures.

"What is very exciting is that some of the largest names and operators in the hotel industry are involved, showing the growing confidence in Bournemouth’s future growth."

As reported in November, the site is still subject to a successful planning permission by Chesham Estates, dating back to 2015, to build a hotel.

The firm said it had begun work on the site when, a few months later, the council withdrew from the development agreement.

Managing director Julian Seabrook told the Echo: "We remain in the dark as to why this cancellation action was taken on behalf of the council just when we were about to start work toward the end of 2015."

The council says the agreement was terminated as development "was not progressing within the anticipated timescales".