John Curry, Scottish Borders Council’s director of infrastructure and environment, said a housing developer bid significantly more than the asking price for the site at the Burgh Yard.

Mr Curry spoke at a meeting of the town’s community council last week to address public concerns over the future of the land.

Last year Edinburgh-based Futurity Ventures announced proposals to construct a hotel on the site, as well as a care home, apartments and ‘affordable’ flats. However, concerns were highlighted in February when community councillor Bill White said a bid for social housing had been accepted instead. Despite the setback for Galashiels, on Wednesday Mr Curry said that Scottish Borders Council (SBC) was still “optimistic” that it would bring a hotel to the town.

He said: “A hotel in the central Borders, and in particular Galashiels, is a key priority for Scottish Borders Council. We are doing all we can to bring a hotel to the Scottish Borders.”

Mr Curry told the meeting that SBC received three bids for the land off Braw Lads Brae, one of which was from Futurity Ventures.

The others were from a company looking to establish a drive-through restaurant at the site and an unnamed housing development organisation already active in the Borders, the Border Telegraph reports.

He said the housing developers, who had been “very persistent” over the previous months, offered “so much higher than the asking price”.

Mr Curry added: “There was such a gap between their offer and the second offer, which was the drive-through, and Futurity Ventures’ which was well below the asking price.

Emily McGowan, owner of McGowan Marketing and one of three founders of the town’s popular Heartland Market, said that one of the key messages from a recent business forum was that a hotel was needed in Galashiels. She asked: “Where do we go from here?”

Mr Curry said that SBC officers had met with Futurity Ventures in January. He said the firm was “warm and receptive” to looking at other opportunities for a hotel in the town and was looking at carrying out appraisal work.

He added that “We don’t want to close the door on this, we still want to deliver a hotel for Galashiels,” stating that the accusation that SBC stood in the way of the project was “not quite accurate”.

Mr Curry did not reveal the exact sites that were being considered, but said they were “in and around the vicinity of the railway station”. Mr White challenged Mr Curry, stating that what he had heard was “completely contradictory to what you’ve said here”.

He said: “They [Futurity Ventures] spent a significant amount of money and then at the last minute they see they’ve been outbid. They were never given an opportunity to go back in.”

Mr Curry added: “I’m not making this up. We can’t do negotiations and counter offers, that’s not the way we can operate.” He said that there was a possibility for a joint venture between the council, Futurity Ventures and South of Scotland Enterprise.

On the Burgh Yard development, Mr Curry said that it would be made up of 91 ‘affordable’ flats, of which there is a “significant need in the Borders”. He concluded: “There’s an economic need and demand for housing and it’s an economic enabler.”