A LOSS-making hotel is set to close and be converted into 25 new flats because it cannot compete with cut-price chains.

Plans have been submitted to Brighton and Hove City Council to convert Preston Park Hotel in Brighton into 25 flats.

Directors at the hotel said the 34-bed venue is currently trading with “unsustainable” annual losses of up to £103,365 and has required capital injections of more than £53,000 per year to continue trading.

Director Rovertos Savvides said smaller hotels could not compete with the reduced rates of hotel chains like Travelodge.

Industry bosses warned that it was a difficult time for hoteliers with competition keeping room rates static while other costs continue to rise.

The redevelopment would see the oldest part of the hotel converted into 16 flats while an extension will be demolished and replaced with a new building for nine affordable flats.

If granted planning permission, the conversion is expected to take up to two years.

Mr Savvides said that it had not yet been decided when the hotel would close if granted consent or whether it could remain open if the plans were rejected.

The hotel in Preston Road began life as a pair of villas dating back to 1874 and was converted from a nursing home to a hotel in 1965 before further extensions in the 1970s and in 1994.

Applicants said the hotel redevelopment will improve the appearance of the building to the benefit of the Preston Park Conservation Area and neighbouring residents will benefit from a reduction in traffic to the site.

Planning agents said the new building is “visually superior” to the extension it will replace while the South corner veranda will be "restored to its former glory".

Mr Savvides said: “It’s because of the location but also because of a lot of aggressive competition from some of the big chains who have reduced rates and smaller hotels like us can’t survive because we don’t have the volume.”

Jeremy Ogden, chairman of the Brighton and Hove Hoteliers' Association, said there was sufficient capacity in the city even before new proposed hotels started coming “on stream”.

He said: “Because it is so competitive, nobody has raised their rates in about four years but utility costs continue to rise as does added competition from Airbnb and party houses.

“Part of the attraction for visitors to Brighton is its independence, and that includes the independence of its guest houses, and so planners should consider this when any new hotels are being considered.”