Firefighters are currently on the scene of a major blaze at the Moorfield Hotel in Brae.
Scottish Fire and Rescue Service was alerted to the incident at 12.30am today (Monday).
“Currently there are six fire appliances and an incident support vehicle on scene,” a fire service spokesperson said at around 8am.
Photographs taken in the early hours of this morning show flames ripping through the 100-room hotel causing widespread damage.
Hotel owners BDL announced in June that the business would be closing in September after Total made the decision to stop housing Shetland Gas Plant workers at the site.
The hotel had been mainly used by oil and gas workers throughout its history. Without its main source of income, BDL said it had become “completely unviable”.
Last month, the closure date was brought forward to 5th August, after a possible contract extension with Total was ruled out.
BDL director Stuart McCaffer said at the time it was “sad news” and the 45 staff were “very upset”.
Staff, some of whom were still living in the hotel, are reported to have been accounted for.
However, according to Facebook comments, around six staff and many workmen have lost their belongings.
A campaign seeking donations helping to provide clothes and toiletries has been launched.
People are being urged to donate clothes to a drop-off point at the Mid Brae Inn when it opens this afternoon.
James Milne has set up a donations page on Go Fund Me, which raised more than £250 in less than an hour.
Donations being sought include men’s clothes, size large and upwards, men’s shoes size 8-12, women’s clothes size 8-10 and women’s shoes size 4-5.
Mr Milne said on the Go Fund Me page: “I know my friends who lived there have lost everything they own.
“We would like to set up taking donations to help get them on their feet till such time arrangements can be made for them to buy new things.”
People can also contact Cat Duncan via Facebook to arrange collections.