Exclusive:Fury and resignations over Church of Scotland's plans for its Israel hotel

The Scotsman has learned that an influential Kirk group is considering plans which could lead to significant changes to the way the boutique hotel in the town of Tiberias is run, paving the way for a commercial firm to take over its day-to-day operations.

The move has sparked considerable unrest within the church, with resignations from its Israel Palestine committee. It is understood there have also been resignations among directors of the Kirk-owned subsidiary entity which has managed the property for the past two decades.

The Scots Hotel, based on the shores of the Sea of Galilee, has long been regarded by the church as a lynchpin of its presence in the region, standing as a place of peace and reconciliation.

But at a meeting of the church’s assembly trustees last Thursday resolved to “explore” plans to lease the hotel building to a third-party hotel operator, or devolve the daily management of the hotel to a management company.

Sources familiar with the proposal, which has yet to be ratified by commissioners of the General Assembly, said the move would have a major detrimental impact on the church’s work and standing in the region.

“The way the church runs the hotel is that you have people who are Jewish, Christian, Muslim, Israeli, and Palestinian, all working together and coming together,” one source explained. “The church pays Palestinians the same rate as they pay Jews and Christians - there’s no discrimination, everyone gets paid exactly the same.

“The concern is that in leasing it out, the church won’t get the money it’s looking for, but also that the ethos of having people of all backgrounds and faiths working together in that fractured place won’t be there any longer. Essentially, the church is just turning its back on it.”

The hotel in the northern Israeli town of Tiberias began life as a hospital in 1894 after a group of Scottish missionaries led by the surgeon, Dr David Watt Torrance, came to the Holy Land. It continued to operate as a hotel and maternity ward throughout much of the 20th century, but it was later used as a modest guesthouse.

By the turn of the millennium, the General Assembly took the decision to turn it into an upmarket hotel, a development that cost around £10 million. The investment of such a sum proved divisive. Supporters of the project said the new building could be a place of reconciliation, and warned that if it was sold, it would in all likelihood be purchased by Israelis, dealing a bitter blow to Palestinians.

But opponents of the hotel refurbishment scheme railed against the allocation of millions of pounds at a time when the church was having to sell off properties and merge congregations, a trend that has only intensified in the past quarter century.

Since it opened its doors in 2004, further funds have gone on upgrading the hotel, which can host conferences and events of up to 700 people, and it now boasts its own spa and “wellness resort.”

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However, the property has been incurring significant losses in recent years. According to the church’s latest accounts, St Andrew’s Galilee Ltd, the Israeli-registered entity, generated income of £3.45m in 2024, but spent £4.25m, leading to a net loss of more than £800,000, with total net liabilities of £3.3m. In 2023, it incurred net losses of more than £1m.

The accounts noted that as a result of “cost reductions in the entities and some support from the Israeli government during the time of the conflict,” cash flow forecasts by the Scots Hotel and the St Andrew’s Guesthouse - a 19 bedroom property the Kirk owns in Jerusalem - demonstrated that their operations could be maintained without any additional financial input from the national church.

But neither the company behind the Tiberias hotel, nor St Andrew’s Scottish Centre Limited, an Israeli firm set up to manage the Jerusalem guesthouse, made any rental payments or loan repayments to the Church of Scotland trust in 2024. According to the church accounts, such steps were taken to “maintain required cash balances during the current period of uncertainty.”

One source said consultants brought in by the church suggested the Tiberias hotel would “turn around” by 2028 and provide income to the church in the region of £300,000 a year. Despite such forecasts, the source added, the assembly trustees wanted to “wash their hands” of the property.

“They’ve just decided that they don’t want it,” they explained. “The trustees are looking inwardly, not outwardly. They’re circling the wagons in Scotland.”

The flashpoint over the church’s Israeli properties comes amidst ongoing cost pressures facing the Kirk. In an update last month, the assembly trustees said it was a “constant” struggle to strike the right balance between their Christian calling to love one another and their fiduciary duty under law as trustees.

They pointed out that bookings at the Tiberias hotel had “significantly decreased” to the point where to keep it going in the short and medium term required “a number of significant cash injections.”

The trustees added: “We have committed to do this to support local staff and get through the current crisis, but are conscious that doing so means less money to support ministry in Scotland.

“This is more than a financial question as underlying it is our theology as part of the world church and the General Assembly's commitment to our work in Israel and Palestine.”

A spokeswoman for the Kirk said the trustees considered a “detailed option appraisal” at last week’s meeting, focused on securing a “sustainable” future for the hotel after what she described as a “hugely challenging period” following the pandemic and subsequent conflict in the region.

She explained: “One option was to devolve the daily management of the hotel to a management company or lease the hotel building to a third-party hotel operator. The trustees have resolved to explore this option further but have taken no firm decisions

“In due course a recommendation will be made by the trustees to the church’s General Assembly next year, based on the outcome of this exploration, which cannot be pre-empted at this stage.”

She added: “Members and office-bearers in the church will have a range of views on this, as in many other areas. The trustees respect the integrity and strength of these views, which have led two office-bearers to resign their positions.

“The Church of Scotland remains committed to continuing its Christian presence in Israel and standing with all those in the region who are working for justice and peace for all people. “