The al-Mashtal doesn't have tourists and sits next to a military training camp, but its very existence is a symbol of optimism

From the hand-carved bed in the al-Mashtal's royal suite you look straight out to the setting sun casting pink and orange hues over the darkening Mediterranean. Below the expansive terrace, scattered with wicker sun loungers, is a lavish swimming pool set in tastefully landscaped gardens.

Six floors down, polished glasses line the shelves of the hotel's piano bar. Crisp cotton sheets dress the beds; fluffy bathrobes hang in gleaming bathrooms. Behind the oak reception desk in the vast marble-floored lobby a charming young woman with long curls and a welcoming smile greets visitors.

This looks and feels like an upmarket resort hotel in, perhaps, Sharm El-Sheikh. But this is Gaza City, and if you turn your eyes away from the setting sun you will see a Hamas military training camp next door which was recently bombed by the Israeli military.

The al-Mashtal is Gaza's first and only five-star hotel, an ambitious project in a place where there are no tourists and around 70% of the population lives below the poverty line. After a troubled history the hotel is in the process of a gradual opening; the early signs are that it faces a challenging future.

Construction began in the mid-1990s in the optimistic days following the signing of the Oslo accords when many believed lasting peace and a Palestinian state were realistic prospects. Funded by a consortium of Palestinian businessmen and Gulf state backers, it was originally planned as an office block but the outbreak of the second Palestinian intifada brought work to a halt.

The building, redesignated as a hotel to be operated by the upmarket chain Mövenpick, was eventually completed in 2006. A year later Hamas took control of the Gaza Strip following bloody battles with their rivals Fatah, and Mövenpick pulled out. The hotel was mothballed.

Then a year ago ArcMed, a Spanish group, agreed to take over the management and open the hotel. "I came to the hotel and saw the possibilities," said the company's president, Anna Balletbo, whose connections with Gaza stretch back more than 40 years. "We decided to try it."

In her view the possibilities were more about job and training opportunities for Gazans than a hard-headed business proposition although she adds: "Our only condition is not to lose money."

After being cleaned, furnished and equipped, the hotel, which was damaged during the war in Gaza in 2008-9, opened 77 of its 220 rooms and two of its restaurants on 1 May. It hired 70 local staff to work with three Spanish managers and began training them to international standards.

The management immediately ran into difficulties with supplies. "Wherever possible we are buying things from the local market," said Balletbo. "We only import what we can't find in Gaza."

At times there have been long delays in getting imported supplies through the tightly controlled crossings from Israel into Gaza. And when the hotel's manager, Rafel Carpinell, wanted to put duck on the menu he discovered that Gazans found the concept of eating the birds incomprehensible. Mussels and mushrooms also been hard to find.

Carpinell, who previously managed hotels in Mallorca and the Dominican Republic, has become accustomed to the sound of Israeli air strikes during the eight months he has spent in Gaza. "At first it was very hard to see everything destroyed," he said. "Now I just pass the days working."

In the absence of tourists Balletbo hopes journalists, visiting delegations and United Nations staff will stay at the hotel. There are signs that affluent Gazans are keen to enjoy the hotel's restaurants and cafes and there have already been a number of bookings for weddings and conferences.

But the pool, which could be a big draw, remains off-limits until the management can figure out a way to avoid transgressing conservative Gaza's social mores. Men and women are forbidden from swimming together and even if the hotel has segregated days, it has yet to find a way ofscreening female swimmers from public view.

There has been no interference in the hotel from Hamas, said Balletbo. Like everywhere in Gaza it is alcohol-free. Of the 70 staff only five are women and the management has been careful to offer shift patterns that respect their needs.

Balletbo is realistic about the hotel's prospects while still optimistic about its symbolic potential in blockaded, impoverished Gaza. "If we are able to not lose money – or very little – in the first year and next year make a little bit of profit, that will be very good," she said. "But what's important is that we can open the hotel, keep it open and show people that this land has possibilities."