The North Aegean Region is advancing a new framework for the development of the historic Sarlitza Palace hotel and the thermal springs at Thermi on Lesvos, with the main aim of creating more favourable conditions for attracting an investor, following years of efforts to restore and reopen the landmark complex, which in the past hosted prominent figures, including Eleftherios Venizelos.
At the heart of the plan is a proposed extension of the property concession from 25 to 40 years, alongside the possibility of constructing additional buildings and a provision for its development through a competitive tender involving a private or public-sector investor.
These changes are included in a draft first amendment to the programme agreement between the Ministry of Culture, the North Aegean Region and e-EFKA, which owns the property.
The complex belonged to the former Health Professionals’ Pension and Insurance Fund (TSAY), while e-EFKA is now its owner. Under the 2016 programme agreement, use and operation of the property were granted to the North Aegean Region to advance its restoration and development, without transferring ownership.
The North Aegean Regional Committee unanimously approved the terms of the amendment.
Changes to the investment plan
Under the decision, the concession of the complex to the North Aegean Region is set to be extended by 15 years, from 25 to 40 years. This means that the concession, which began in December 2016 and was due to expire in 2041 under the original agreement, will run until December 2056 if the amendment is finalised. A further extension may also be granted by a decision of the e-EFKA board.
The longer term is particularly important for the financial viability of the project, given the extensive work required to restore the historic building and develop the spa facilities.
The need to extend the concession had already emerged from market research and an assessment of proposals and studies, which found that a longer term, combined with the possibility of additional construction, was a prerequisite for the project’s financial viability.
The second significant change concerns the possibility of building new facilities on the grounds of the complex. The amended plan specifically includes a 9,600 sq m plot north of the historic hotel, where new operational facilities may be built, provided they comply with current planning regulations and receive the required approvals.
The former hotel has a total floor area of 1,508 sq m and stands on an 8,763.9 sq m plot, which also contains ancillary buildings and archaeological remains.
Hotel use and the investor
As for the building’s future use, the draft amended agreement states that it is not required to remain a hotel, and that a different use may be considered if deemed more beneficial.
It also provides for the possibility of changing the use of the main building from a cultural centre, as approved under a previous architectural competition, to a hotel, subject to approval by the competent bodies of the Ministry of Culture.
As for funding, the draft agreement provides for the use of funds from the Public Investment Programme or co-funded programmes, while leaving the parties free to seek other sources of finance. It also allows for an investor to be sought through a competitive tender process.
However, the decision does not indicate that a tender to select an investor has been announced, nor does it itself constitute a call for tenders.
History of the project
Sarlitza Palace was built in 1909 and opened in 1910, becoming one of the leading destinations of its time for luxury hospitality and thermal tourism. Its guests included prominent figures from political and intellectual life, among them Eleftherios Venizelos.
The complex became the property of the then Health Professionals’ Pension and Insurance Fund (TSAY) in 1933, and ceased operating in 1982. Since then, despite repeated restoration initiatives, the building has remained undeveloped and suffered serious deterioration.
In 1987, the building was designated a listed monument, while in 2014 legislation was introduced allowing the use and operation of the complex to be granted to the North Aegean Region.
Efforts to attract investors returned to the fore in the following years, with the North Aegean Region taking steps to gauge investor interest and prepare the property for development.