Duddingston House Properties and Urbanist Hotels had appealed against the refusal by Edinburgh City Council of two schemes for the former Royal High School building on Calton Hill in December 2015 and August 2017.
International hotel chain Rosewood had been lined up to operate the hotel, which would have housed public bars, restaurants, an art gallery and performance spaces..
The £75m project for the city council-owned building, which was long touted as a home for the Scottish Parliament, was expected to create more than 260 jobs and estimated to be worth more than £35m to the city’s economy had it gone ahead.
But the scheme, which was instigated after the city council staged a competition a decade ago to find a luxury hotel operator for the building – involved the creation of two controversial “Inca-style” stepped extensions, one on either side of the main building.
The developers said the extensions were essential to make the hotel project viable, but critics likened them to putting “Mickey Mouse ears on the Mona Lisa”. However their plans were twice rejected by the council’s own planning committee.
The government’s ruling on the development stated “Overall the proposal does not represent the right development in the right place.”
It described claims by the developers that the development would be “nationally significant” once it was up and running as “a stretch.”
The government’s ruling added: “Ministers conclude that the proposed development would not preserve the former Royal High School building or its setting and would neither preserve nor enhance the character and appearance of the Edinburgh New Town Conservation Area.
However Urbanist Hotels chairman David Orr said: “This is a deeply disappointing decision for us, our investors, and our hotel partners. It is a poor day for inward investment in our vital tourism sector.
“It is now 50 years since the old Royal High School had a proper use and we still do not have a solution that safeguards its future. This decision leaves a magnificent building more at risk than ever.
“As a globally significant city, Edinburgh would have been ideally suited to host a Rosewood hotel.
“It is extraordinary that during a national crisis, at a time when it has never been more important to support Scottish tourism and jobs, our country has been denied a world-class hotel to put it on a level with other European capitals.
“This will not help attract the scale of visitors that Scotland desperately needs as a nation or help to drive economic growth when recovery comes.
“We will be gathering our thoughts as to what we do next. “
Alternative proposals to develop the site for St Mary’s Music School were given the green light in 2016 with a seven-year expiry date on consent due to the unique situation with the hotel plans being appealed.
Despite the approval of the music