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 upper-floor accommodation at Lews Castle is to be 5-star standard and with 52 bed spaces which include en-suite rooms and larger suites. 
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.
Something does not add up right,
16 million pounds of public funds and the operator is allegedly will invest 500,000 after the works is completed.
Does not sound like a feasible business plan,
Any business assessor would say a project that size the owner I.e the publics would get around 20 % of the cost in the form of a premium which would equal to over £3 million back into the public purse….
Fair pair on Kenneth Mckenzie in pursuing court action
“Angus Campbell said that if the threat of legal action transpires, it would be vigorously defended by the council.”
This looks like another case wherein the council’s actions will involve the council tax payers in forking out a fortune in legal costs for what, on the surface, appears to be a case of the council and/or its legal people not following correct rules and procedures.
This comes at a time when they have had the case involving a horse thrown out of court for making mistakes in the papers presented to the court. This, again, involves the council taxpayers in unnecessary expense, and even more expense if they take the case back to court.
These cases are, unfortunately, not the first, nor probably the last time our council through its apparent carelessness or other reasons has involved us in unnecessary and costly legal expenses. If these sorts of cases continue, it seems to me that the person(s) responsible should be reprimanded and/or dismissed. Moreover, if the council itself does not pick up on such mistakes/carelessness, then they should resign their (overpaid) positions.
Our council has played fast and loose with our money for far too long now, and it has to stop.
Re The Leaders comment on Natural Retreats investment of 500K
The upstairs development cost of £5million equates to nearly £100k per bed space produced. What normal business could or would invest to achieve that level of return? It is simply a state handout.
And as regards the jobs produced, after those displaced from within existing private businesses are added in, the nett result might prove to be five or six.
Again, hardly a sensible return for a 5 million investment!!
Graham Heb Lux Holidays
yet another bulldozed “we know best,and push it through regardless inadequate scheme” from a council whose cock-ups are the stuff of legend.Yes the western isles council has a worldwide high visibility profile,but sadly for all the wrong reasons.If you take issue with my cynicism concerning their competence, you only need to go and get confirmation from a certain local horses mouth!!!–EPIC
The Council are seeing a way to have the Castle repaired before it actually falls down – and to be fair to them, what other proposals has anybody come up with over the years to provide the many many millions required to do that and in such a way that the capital providers are genuinely persuaded that there will be sufficient ongoing benefits and revenue income to justify their initial outlay?
There are many further interesting questions to ask about the proposals, though, especially given the way the people of Stornoway currently use the Castle Grounds and the sorts of accommodation and activities provided by Natural in their other UK facilities. One might wonder, for example, what quiet promises have been made to Natural with regard to their clients’ use of the Grounds and what the position of the Stornoway Trust and the Golf Club are in this matter?
Up the creek with a broken paddle again I am afraid, the “religious” cooncillors will be on their knees praying for a horse to take them away, the rest will be listening to Dokus the Dobbin telling them how they are all wrong and only he is right. The Leader will be selling overpriced fuel as normal, The Chief Executive, himself a lawyer, will be looking for a scapegoat, meanwhile the rest of us look on aghast at such incompetence. ….!
Maybe Natural Retreats could get seat on HIE Board and call the upper accommodation an annex.
I hear it worked well for a short period before.
If CNES can’t get a flippin horse out of a detached house and then competently defend their actions in a court of law – why would we expect them to get this right? Looks like local business have been given a two fingered salute and that cnes have rolled over to smooth talkers from the mainland. No concern shown for the businesses that employ people year in year out and keep them on through the difficult times.
This is yet another mess created by the council Legal Department, and it does not take a genius or prophet to predict that these cases are also going to result in us taxpayers bearing the cost of these foolish actions.
Instead of fixing the problem that is there for all but 31 councillors to see, they pretend that all is well and continue to support Burr and his many dysfunctional and expensive legal staff.
Councillors are too busy flying off to junkets to sort the massive problems on their own doorstep.
I wonder if anyone at the council googled Natural Retreats??
Somehow I don’t think we will have to wait very long until the whole web unravels……!