The new owner of the three-star, 77-bedroom Queensferry hotel in Fife is "appalled" at the state the property has been left in by the previous operator, Delight Hotels.
Newcastle-based Cairn Hotel Group is now planning to spend £3m on refurbishing the hotel, which it has bought from Mountain Capital.
Widespread improvements at the hotel, which enjoys views over the Firth of the Forth, are expected to increase the property's rating from three to four stars.
The company has had to immediately carry out basic work concerning the fire system to ensure that necessary health and safety requirements are met, before work gets under way on the refurbishment which will include a new restaurant and bar and the redecoration of all the bedrooms.
Richard Warren, financial director of the Cairn Hotel Group, said: "There are some wonderful staff at the hotel, but they have not been well looked after. It is a huge problem for staff morale if they don't get paid. So we have forwarded them the money, which we are now trying to reclaim from Delight Hotels."
Warren said that all 40 jobs at the Queensferry hotel were safeguarded as the Cairn Hotel Group ensures the property receives the care and attention that it has lacked for some time.
"This is a long-term investment for the company. We will now ensure the necessary standards are in place to rebrand the hotel under one of the major brands from Hilton Worldwide or the InterContinental Hotel Group. We are also looking at the possibility of reviving planning consent for a 100-bedroom extension to the hotel."
The Cairn Hotel Group owns 22 branded and independent hotels, including the Hotel Indigo Kensington Earls Court, London; the Holiday Inn Newcastle Jesmond hotel, Newcastle; and the Doubletree by Hilton Newcastle Airport hotel.
The Queensferry hotel was one of eight hotels which until recently were operated by Delight Hotels. However, following on-going problems relating to poor performance and unpaid bills, Mountain Capital, acting on behalf of the freehold owner of the properties Washington Hotels, ousted Delight Hotels. Licensed Solutions, a company specialising in turnaround and restructuring projects in the hospitality industry, is now managing six of the hotels, while Delight Hotels continues to operate Westfield House, near Leicester.
Three of the directors of Delight hotels - Kyriacos Kimitri and Malcolm Gray (through Corby Hotels) and Justin Wallace - resigned within days of the Queensferry hotel being sold and were unavailable for comment when Caterer and Hotelkeeper went to press. The sole director of Delight Hotels is now Ali Anvari, who was appointed on 10 May.