A LONG-ESTABLISHED Highland hotel has become only the second in Scotland to move into employee ownership.

The Priory Hotel in Beauly, near Inverness, is now majority-owned by its 46 staff after founder Stuart Hutton decided its future would be best served in their hands.

The move comes after the popular Auchrannie resort and spa on the Isle of Arran made the transition into employee ownership in January, when a deal was struck by the Johnston family to transfer shares to its 160 staff. There are now understood to be around 100 employee-owned firms in Scotland.

The Priory deal was part financed by the Inverness branch of Handelsbanken, with the remainder supported by a vendor loan. Under the terms of the deal, an Employee Ownership Trust has been set up to hold 72 per cent of the shares on behalf of the staff. A spokeswoman said the hotel will make contributions from future profits to the trust, which will be used to repay the vendor loan. Once the debt is repaid, surplus cash will be reinvested or paid out as a tax-free bonus to employees.

Kenneth Hutton, son of Stuart Hutton, will hold the bulk of the remaining shares. He will run The Priory as managing director as his father scales back his involvement. There will be roles on the board for senior team members such as general manager Kate Melens.

Stuart Hutton, who formed the now 39-bedroom hotel in 1972, had considered a trade sale. However, Kenneth explained that his father did not “feel that the prospective buyers were the right fit for the hotel.”

He added: “A staff member had once mentioned employee ownership as a potential solution to this – it meant the business would be sold to those who know it best, and it wouldn’t be taken over by a large chain. The option stuck with my dad and when he felt like he had the correct management team in place, the time was right to begin progressing the buyout.”