Entrepreneur Peter de Savary has abandoned his plan to turn the rundown Royal Golf Hotel in Dornoch into a top-class luxury holiday complex, but he may yet make a considerable profit out of it.

The 24-bedroom inn, which overlooks the first tee on the world famous Royal Dornoch golf course, became available in December 2006 when the London and Edinburgh Swallow Group went into liquidation. Now it is up for sale again with an asking price of £5m.

Mr de Savary's company Havana West Ltd bought the hotel just after it closed with the loss of 27 jobs.

Mr de Savary had a connection with the area, having founded the Carnegie Club at Skibo Castle, which he sold in 2003 to a group of members.

He promised to turn the hotel into a luxurious establishment to rival the best in the world, saying it would open in May 2007 following extensive refurbishment. Up to 40 jobs were to be created.

Architects working for Mr de Savary produced plans for the facelift, which was to have included a two-storey extension to the rear of the 111-year-old building to provide 24 suites.

There was also to be a nine-bedroom block next to the golf course along with 11 luxury holiday apartments to the west of the hotel. Planning consent was granted in October last year despite local reservations. But a start has yet to be made to the project.

Mr de Savary's spokeswoman, Adrienne Eastwood, explained: "The Royal Golf does not fit in with our corporate strategy. We are concentrating on our properties in the south-west."

But his decision to pull the plug has not surprised locals.

Community Council chairman Gordon Clunie said: "We thought all along that he would put it up for sale. That is the way he conducts business."