The government’s attempts to dispose of Selmun Palace Hotel and the 18th century castle next door have fallen through a second time after the only two bids received fell short of requirements.

When the second call for tenders closed in April, the Land Department had received two, from Caterina Vitale Company Ltd and Orbis Group International. The former submitted a bid of nearly €8.6 million (just above the minimum required) while the other company did not specify how much it was offering.

However, the bid by Caterina Vitale Company Ltd was not accompanied by a €150,000 bid bond, as required in the tender document.

The situation echoes that in January, when only one bid offering a puny €2 million – for the purchase of the hotel and temporary lease of the castle – was received. It was turned down because it was deemed too low and the government raised the bar to €8.4 million. It is still unclear whether the government will go ahead with a third attempt to sell the hotel, owned by a subsidiary of national airline Air Malta. The airline, which announced losses amounting to €31 million for the last financial year, decided to sell non-core operations and focus solely on the airline business. In fact, one of the conditions is that the bidder purchase Air Malta’s entire equity in the company.

Selmun Castle, built by the Knights of St John in 1783, is being offered on a temporary emphyteusis for a period of 99 years against a ground rent of €70,000 a year. The castle houses some of the hotel suites and used to serve as a venue for weddings and other functions.

Often perceived as the baroque version of Verdala Palace, it was the most important property of the Monte Di Redenzione, a pious foundation set up in 1607 for the ransom of Christian slaves from Barbary States. The castle was leased to Air Malta for 99 years on condition that the company restored, preserved it and guaranteed free access to the public.