Lews Castle plans 5/3/14

Sirs,

The regeneration of Lews Castle has been a long-standing ambition of the Comhairle and its partners. The vision to bring this iconic building back into operation through a mixed-use heritage and hospitality scheme has been well publicised over many years and was encapsulated in the last Area Tourism Partnership (ATP) Visitor Strategy.

The support of the community and the potential of the project to deliver significant long term benefits across the islands were major factors that enabled the Comhairle to secure over £9 million of external funding for the project, an exceptional level of support. Funding bodies have made it clear that the new museum and archive, public access to the castle and a commercially viable hospitality operation are all critical to the overall success of the project.

These elements make this a unique project and, ironically perhaps, also explain why the Comhairle had only limited success in attracting serious interest from the private sector in the early stages of the project. It was clear from discussions with potential investors that the small scale of the development, the requirement for public access to the Castle and the adjacent museum and archive were seen as issues that would affect the viability of an exclusive hotel development.

It is vitally important to understand the whole context in considering the current proposals for the development of the upper floors of the castle. It is also important to understand that the operation of the upper floors and the ground floor public rooms - which will provide public facilities, including a café, open to all visitors and a range of outstanding rooms for functions – are linked and are part of the hospitality opportunity for which the Comhairle has sought a private sector partner.

Two separate procurement exercises were undertaken over the past three years in order to attract a private sector partner. Both procurements allowed flexibility to enable the market to respond to the opportunities offered within the Castle. Indeed, from the outset the tender documentation made clear that although the potential for hotel use had been identified, other commercial options would be considered.

The exact nature of the private sector proposals for the upper floors was always going to be market-led, within the broad requirement of being compatible with the heritage elements of the project.

The first process resulted in a proposal for a small 4-star hotel and a preferred bidder was identified. Unfortunately, the preferred bidder later withdrew their interest in the project and the Comhairle recommenced the procurement process.

Following a review, the hospitality element was reviewed by the project board. The hotel concept (4-star minimum) was retained, whilst also allowing the market to propose other high quality accommodation models, such as serviced apartments and self-catering, the latter required to be 5-star.

The Comhairle agreed to a second tendering on the basis of a report considered in public on 6 September 2012.

In both procurement processes, the Comhairle met its legal obligations in full, by advertising through Procurement Contracts Scotland and the Official Journal of the European Union. That is the proper process for all public sector tendering exercises and is well known to the market.

It was, of course, open to any business, local or otherwise, to tender if they so wished. I am satisfied that the procurement processes were fair, transparent, compliant and not underhand or corrupt in any way.

In response to the second procurement process the Comhairle received one proposal from an international leisure operator. I can confirm that the proposal for the upper floors is for luxury accommodation with 26 bedrooms and nine living/kitchen spaces which allow for self-catering if required.

The accommodation also allows bedrooms to be let as conventional en-suite hotel rooms.

The restored ground floor of the castle will feature a dedicated reception space for guest check-in and the operator will operate the museum cafeteria and shop. The public rooms will provide an outstanding venue for weddings, conferences and other celebrations. The proposal will create up to 30 direct jobs.

The assertion [in weekly newspapers] that the proposal amounts to a 100-bed self-catering operation is false.

The Comhairle has taken advice on state aid issues in relation to the overall regeneration project which has always involved the castle being regenerated with public funding and ownership remaining with the Comhairle. Public funds are being use to renovate the castle and to put it into a condition to enable any potential operator to use it.

The project was made available to all interested parties, and the private sector partner will be required to pay a commercial rent and to invest significant sums into the project.

The Comhairle shares the concerns expressed by the industry regarding transport capacity, particularly ferries. These matters are currently being addressed, and industry representatives have recently been invited to participate in a Ferries Task Group led by the Comhairle. However, the new ferry on the Stornoway to Ullapool route is a very welcome development and, subject to final timetabling being confirmed, should provide additional capacity.

The recent positive press publicity regarding the growth in the tourism sector, with Lewis and Harris being named as the best island destination in Europe and the opportunities arising from the new Tourism 2020 Strategy suggests that there are significant opportunities for expansion of the tourism potential of the Outer Hebrides.

Doing nothing with the upper floors of the Castle is not an option. Using the opportunity to support further growth as well as adding to the quality and diversity of the existing product is an imperative to realise the full economic benefits of the Lews Castle Museum and Archive project.

The Comhairle is still in discussion with the preferred partner and operator regarding the details of the commercial package. Assurances have already been given that all relevant issues will be shared with the Outer Hebrides Tourism Industry Association in due course.

Malcolm Burr

Chief Executive

Comhairle nan Eilean Siar

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