Liverpool City Council has approved Downing's proposals to redevelop the former Scandinavian hotel on the corner of Duke and Nelson streets.
Located in the heart of Liverpool's Chinatown, Downing's GMD Developments wants to convert the property into a new 180-bedroom hotel, bar and restaurant.
Paul Houghton, development director at Downing, said: "Downing has always believed in the potential for this site to offer something unique in this part of the city centre and we're looking forward to progressing the development in due course."
Houghton did not disclose the cost of the development but confirmed Downing is still in discussions with Marriott over the operation of the hotel.
Within a planning document prepared prior to the decision, it said the vacant site comprises four buildings including a four storey Victorian building fronting onto Nelson Street, which was originally used as a house, showrooms and workshop and been vacant for 30 years.
A four storey 20th century warehouse building, facing onto Duke Street, with warehouses of similar style was added later in the 1950s, on Cummings Street and Cornwallis Street. The smaller and much altered late-Georgian house at 8/8A Nelson Street, formerly the Golden Yuen restaurant, is the last parcel in the development site.
Downing's application said a majority of the buildings will be retained and converted with the former restaurant building remodelled to provide the main entrance into the hotel.
The future of the site has remained in doubt for some time. Downing was selected to develop the site by Liverpool Vision in 2002.
A compulsory purchase order and public inquiry followed after opposition by former owners Frenson and two Chinese businessmen.
Downing originally intended to redevelop the building into a mixed-use scheme offering an 80-bedroom hotel, 42 residential apartments and two storeys of offices.