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A Stornoway hotel group has lodged an official complaint with the European Commission, accusing Western Isles Council of breaking contract rules.

 

 

Cala Hotels which runs the Cabarfeidh, Caladh and Royal hotels in Stornoway - allege the council acted unlawfully in awarding a tender to lease the rescued Lews Castle to hospitality operator, Natural Retreats.

 

Kenneth Mackenzie, Kenman’s managing director, confirmed a state aids complaint - which deals with alleged unfair subsidy rules - has been lodged with the EC.

 

Local providers who stress the market is already over-saturated say they will struggle if the “unfair competition” undercuts their prices.

 

For the last 25 years, the council-owned Lews Castle was left to decay but an ambitious £18 million redevelopment is bringing it back to its former glory.

 

Natural Retreats is renting the castle on a long term lease from the Comhairle and plans to open the newly renovated ground floor in October. Later, the upper floors will be redeveloped into hotel rooms and self-catering accommodation.

 

Natural Retreats will open 26 apartments - a total of 52 bed spaces - which can double up as either self-catering or hotel rooms - within the castle next summer.

 

However, Kenman Holdings which own Cala Hotels - the biggest hotel group in the Hebrides - insists the tender process adopted by the council was “not genuinely competitive and was significantly non-compliant with applicable European laws.”

 

Kenman Holdings has also launched legal action against the council in the Court of Session where it is seeking a judicial review over the “flawed” council decision.

 

Managing director Kenneth Mackenzie said “Western Isles Council has stated that the procurement process undertaken was open and transparent.

 

“We disagree and wish to have this matter legally tested.”

 

Mr Mackenzie added: “Our complaints are founded upon some 1,500 pages of documentary evidence released by the council and Highlands and Islands Enterprise under Freedom of Information requests.”

 

Mr Mackenzie said the island tourism trade is “very supportive” of renovating the castle’s ground floor into public areas but are “seriously concerned their businesses will be badly damaged by the subsidised operation of the accommodation proposed on the upper floors of the development.”

 

The Comhairle highlighted any legal action and formal complaints will be “vigorously defended.”

 

Angus Campbell, leader of the council, said: “We are confident in the processes and procedures regarding the Lews Castle Museum and Archive project, including the appointment of the operator partner.

 

“The council took appropriate advice on state aid issues.”

 

The council maintains the tender was undertaken in an “open and transparent” procedure

 

Mr Mackenzie opted not to submit a bid, “despite registering his interest during the open tender period,” it added.

 

 

Council accused of breaking rules over Lews Castle hotel deal

 

4 Aug 2015