PLANS to convert part of Lews Castle into luxury self-catering units are set for a legal challenge as an island hotel group announced it is pursuing a judicial review.
Kenman Holdings Ltd, which operates three hotels and a holiday company in Stornoway, announced it was set to raise an action in the Court of Session claiming the tender process for an operator to run the units was not genuine and broke European laws.
The leader of Western Isles Council issued a strong rebuttal promising to defend any action but claims have emerged the council awarded the contract while discussions with the local tourism body were still ongoing.
The accommodation will be offered to guests in different configurations containing one, two and three bedrooms to allow a wide range of visitors to be accommodated from families and couples to groups and corporate guests.
The tender to manage the self-catering units was awarded to Cheshire-based Natural Assets Investments Limited, trading as Natural Retreats, which operates other luxury holiday attarctions around the country.
Matthew Spence, founder and CEO of Natural Retreats, recently said: “I am delighted to share our vision for Lews Castle. We hope to create a 5-star accommodation offering and service and look forward to sharing this wonderful destination, which boasts stunning scenery, a rich history, wildlife and endless activities, with our guests.
“It is easy to see why this was voted the number one European island to visit recently by TripAdvisor. I couldn’t agree more.”
Kenneth Mackenzie, managing director of Kenman Holdings which runs the four-star Caberfeidh Hotel in Stornoway as well as the Royal Hotel and the Cala Hotel, said they had been in touch with Western Isles Council and Highlands and Islands Enterprise in relation to the tender process.
The contract for private sector development partner for the Lews Castle development was then awarded to Natural Assets Investments Limited and its associated company NA Lews Castle Limited.
Kenneth Mackenzie said: “Our action has the support of over 40 small local businesses who, whilst very supportive of the museum and ground floor renovation of the castle, are seriously concerned their businesses will be badly damaged by the subsidised operation of the accommodation proposed on the upper floors of the development.”
Kenamn is also lodging a complaint with the European Commission on the grounds of breach of European rules on the award of concessions and the rules on state aid.
Council leader Angus Campbell said that if the threat of legal action transpires, it would be vigorously defended by the council.
He added: “I am extremely disappointed at what I hope is not an attempt to undermine the most significant investment in cultural and tourism assets ever undertaken in the Outer Hebrides. This is a flagship, generational project for the community of the Outer Hebrides which will create much-needed jobs and benefit businesses throughout the area.”
He encouraged islanders to go to a Natural Retreats exhibition being held in Stornoway Town Hall this week.
Mr Campbell said Natural Assets Investments Ltd had committed to a minimum capital contribution of £500,000 as well as taking the whole operational risk associated with the project.
“The procurement of the private sector partner undertaken in 2012 was open and transparent. Despite registering his interest during the open tender period, Mr MacKenzie chose not to submit a tender.”
However, Ian Fordham of island holiday providers body Outer Hebrides Tourism sees it differently.
He said the tourist bodies were in extensive dialogue with the council, representing both the concerns of members in Lewis and Harris over the risk of unfair displacement of trade from existing local businesses by a highly-subsidised accommodation operation at Lews Castle and also highlighting factual errors and misrepresentations within reports used by CnES in making their decision.
He added: “These industry concerns were not accepted and the contract was awarded whilst we were still in discussions with CnES.”
Highlands and Island Enterprise is expected to be named in the legal action but it claimed it would be “inappropriate” to comment at this stage.
No one at Natural Retreats responded to a request for the company’s view.