Edinburgh capsule hotel property developer escalates appeals to Scottish government

A property developer has taken plans to convert a former office block into an over 500-bed capsule hotel in Edinburgh directly to the Scottish government after the application was deemed refused by the local authority.

Atholl Crescent Propco submitted a planning application to Edinburgh City Council in September 2025 to turn 14-17 Atholl Crescent in the city’s West End into a mixture of private double rooms and ensuite capsule rooms, with a total of 544 beds.

However, on the city’s planning portal, it states that the decision’s status is “deemed refusal” which is where a planning application is considered rejected because the authority failed to issue a decision within a specified legal timeframe. This allows the applicant to appeal the decision as if it were formally denied.

The application will now be decided by a Scottish government reporter after Atholl Crescent Propco lodged an appeal, shifting the decision from local level to the national planning system.

The developers’ move to appeal directly to the Scottish government before a decision was determined locally has caused some local upset.

In the documents submitted to the Scottish government the developers state: “The ambition for AtholI Crescent is to create a hotel experience that appeals to the new wave of travellers who value meaningful experiences, great locations, and real value for money.”

It added: “The proposals comprise conversion of the existing office space to hotel use, with guest bedrooms spread across five floors and mews building. It is intended that the hotel will provide a mixture of private double rooms and ensuite capsule rooms across a total of 78 bedrooms, with 544 beds.”

The plans also show that there will be a bar and social hub area for guests.

It also said that the £30m investment will “generate substantial employment” by providing up to 42 full-time jobs once the hotel is operational, and will contribute almost £1m annually in business rates and visit levy rates.

Permission had previously been granted in 2023 for the building to be converted into 34 apartments.

Atholl Crescent Propco is working in partnership with BlackRock and Siggis Capital, the latter of which has previously worked with Virgin hotels in Edinburgh and Glasgow.