IT lay silently neglected for nearly 50 years, but now the iconic former Royal High School overlooking Edinburgh's Old Town has become a focal point for the future care of heritage in the Scottish capital.

Two rival bidders have sought to win the right to revamp the lofty A-Listed Thomas Hamilton masterpiece, and one plan to turn the building into a luxury hotel may this week face an uphill struggle to gain backing from councillors after official recommended its rejection.

Developers Urbanist Hotels and Duddingston House Properties have said the £75m proposal would see the building on Calton Hill become a "world class" facility.

However, a report to go before councillors said the plan would have a "significant adverse impact" on the Calton Hill.

A separate £35m plan to move the St Mary's Music School across the city into a the building has already gained planning permission.

Despite winning an Edinburgh City Council contest to recreate the derelict school, the hotel developers have so far failed to win backing from planners, while also facing criticism from heritage groups.

Councillors will decide on Thursday whether to back the hotel plan or accept their officials' recommendation for refusal.

The planning officials said in their report: "The proposed interventions to the listed building would have a significant adverse impact on the architectural integrity, composition and special character of one of the UK's finest listed buildings.

"Alternative consents, for the redevelopment of the building into an international music school, exist."

The report said the plan does not comply with national guidelines on historic buildings, the city's development plan or Edinburgh planning guidelines.

The report states: "Proposals for demolition do show that the luxury hotel would provide economic benefits to the city.

"However, the proposals fail to address the requirements of [the] Historic Environment Scotland Policy Statement 2016.

"Further, the demolition cannot be granted in isolation as test c) of HESPS is inextricably linked to the economic growth generated from redevelopment proposals.

"These proposals are considered unacceptable."

David Orr, chairman of Urbanist Hotels, said yesterday: “We need to be very clear about what is now at stake for the very future of the old Royal High School.

“Our revised proposal is the result of 18 months intensive work and considerable investment in order to fulfil our contractual obligation with the council.

"During this time we have taken time to listen to a wide range of stakeholders and heritage experts and taken their views on board.

“We now have a design solution which not only protects and promotes the magnificence of Hamilton’s centrepiece building but also has a viable and long-term investment plan in place to maintain it as part of the city’s living and breathing heritage."

He said Hamilton’s masterpiece has been publicly owned since 1829, but never publicly accessible.

Mr Orr continued: "Our design will restore and regenerate this national treasure with a new use as a world-class hotel for the people of Edinburgh and beyond.

"Heritage and conservation are central to our plans.

“This is the only proposal that can realistically guarantee the future of the Hamilton building – both architecturally and financially.

"Without it, we risk another 50 years of disrepair and misuse, which would be catastrophic for both the building and the city.

"I am confident that those who genuinely care about Edinburgh’s future, and can look through the emotional rhetoric and see the hard facts, won’t let this happen.”

Carol Colburn Grigor, whose family's Dunard Fund has been a major benefactor of the Edinburgh International Festival, is helping bankroll the rival proposal to move St Mary's Music School into the unused Hamilton and spoke out over the hotel for the neoclassical structure which is partly responsible for earning the city the title of "Athens of the North".

She wrote along William Moyes, who is the music school chairman, and William Gray Muir, of the Royal High School Preservation Trust, to Lord Provost Frank Ross, saying: "This [hotel plan] is a red line we should not cross for the sake of narrow commercial interests.

"Not when there is a better option."