Northern Irish developer Benmore is expected to confirm a deal with InterContinental Hotels Group in the coming days to build a five-star hotel tower above the Theatre Royal in Manchester city centre.
The listed theatre venue on Peter Street will be preserved and handed over for occupation to the Library Theatre according to the terms of the deal.
The height of the new tower, with a construction cost of £80m and designed by architects Stephenson Bell, is not yet known. Speculation suggests it could be as tall as 30 storeys. English Heritage will determine the height and materials used in the new building.
IHG has long been keen to get a foothold in Manchester for its synonymous brand, reserved for premier cities around the world. The only other InterContinental Hotel in the UK is in London's Park Lane.
The world's largest hotelier with 1,800 outlets, IHG operates Crowne Plaza, Staybridge Suites and Holiday Inn brands in Manchester already.
IHG was linked a year ago with Allied London's Spinningfields and was rumoured to be close to taking the Manchester tower on the edge of the scheme.
The position of the Theatre Royal next to the Radisson and within the so-called ring of steel around the Manchester Central convention centre, where security for party conferences is concentrated, was believed to have been a major factor in the deal.
WHR Property Consultants is advising Benmore. All parties declined to comment.