Montenegro has defended its decision to allow an island fortress and wartime concentration camp to be transformed into a luxury resort, a move that has sparked anger among relatives of former prisoners.

Situated on the island Mamula, in the popular bay of Kotor in the Adriatic Sea, the 19th-century fort was run by fascist Italian forces during the second world war as a concentration camp. Dozens of inmates are believed to have died there.

Now the Balkan country has granted a 49-year lease to Orascom, a Swiss-Egyptian company, to invest €15m euros (£11.4m) to build a high-end hotel with a spa and marina jetty.

“We were facing two options: to leave the site to fall into ruin or find investors who would be willing to restore it and make it accessible to visitors,” Olivera Brajovic, head of Montenegro’s national directorate for tourism development, told AFP.

Brajovic said plans for the conversion included a memorial room to former inmates. Relatives of some of those detained at Mamula during the war have come together to oppose the project, which they say is inappropriate given the island’s dark past.

“To build a luxury hotel dedicated to entertainment at this place where so many people perished and suffered is a blatant example of lack of seriousness towards history,” campaigner Olivera Doklestic told AFP.

The 54-year-old woman, whose grandfather, father and uncle were imprisoned on Mamula, said the fortress should be renovated and opened to visitors as a historic site. “No concentration camp in the world has been transformed into a hotel,” she said.

According to the local war veterans’ association, Mamula had more than 2,000 prisoners, 80 of whom were executed while 50 others died from hunger amid the grim conditions.

While prisoners’ relatives oppose the hotel plan, the PR agency Magna, which represents Orascom, said the local war veterans’ group had given approval for the project, which includes plans to conserve the fortress.

Salt and Water, the Serbian studio designing the resort, said in an emailed statement that it was “of the utmost importance to keep the original structure of the fortress intact” because Mamula was of “great historical value”.

“The biggest challenge was to design a completely new and somewhat extravagant hospitality object on the already existing building while preserving Mamula’s unique facade,” the company said. “Therefore, all the potential intervention on the fortress’s exterior had to be minimised.”