THE COMPANY behind plans for a new hotel on the site of the former health board headquarters in Lerwick is looking for a new hotel operator to partner with after Premier Inn decided to pull out of the project.
A spokesperson for Breiwick Bay Properties Ltd said the company was “very disappointed and surprised” by the development.
Premier Inn said it decided against pursuing the proposed 98-bedroom hotel on the site of Brevik House further because of concerns over the financial viability of the project.
Breiwick Bay Properties Ltd – which is part of Aberdeen based property developers Ardent Group – said it will now look for other hotel operators.
However, it admitted that over 30 flats and houses on the site – which has consent from planners – is still an option.
“The decision was taken by the Premier Inn board of directors as they do not see a hotel development in Shetland financially viable at this stage,” a spokesperson said.
“We are now looking at other hotel operators and in any case we have an excellent residential scheme for the site with full planning permission.”
Acquisition manager for Premier Inn in Scotland Nick Johnston said: “We have been in discussions with the owner of the Brevik House site in Lerwick about the potential to bring a Premier Inn hotel to Shetland.
“Unfortunately, we have taken the decision not to progress the discussions further as it is not financially viable to create a new Premier Inn hotel on the site.
“As a business we are very active in Scotland at the moment. We have around 500 Premier Inn bedrooms that are under construction and due for delivery in Scotland in the next eighteen months.
“We are also continuing to search for sites in new locations across the country where we are under-represented and where our customers wish to stay. Unfortunately in this instance we have not been able to make the economics of the Brevik House site work.”
The company said the concerns it had over the finances stemmed from the cost of building a new Premier Inn on the site and the rent it could afford to pay.
It comes after the team behind the plans sought offers in excess of £10 million to acquire the proposed hotel in view of leasing it to Premier Inn.
Plans for housing on the site of the old NHS headquarters received planning permission in 2018, but Breiwick Bay Properties Ltd later reverted its focus back to its original plans for a hotel.
The current hotel plans were approved by Shetland Islands Council’s planning team this summer.
There were objections from some local accommodation providers concerned about the impact the hotel could have on the sector, but they did not play into the decision as planning permission in principle had already been granted in 2017.
Travelodge, meanwhile, has previously expressed an interest in running a hotel in Lerwick.