Hinton Properties has started on site St Mark's House in Birkenhead, refurbishing the building into a 67-bedroom Premier Inn Hotel.
The former Crown Prosecution Service building will be partly demolished to allow for extra car parking while the remainder of the site will be converted into a hotel including a bar and restaurant.
St Mark's House is adjacent to the Birkenhead tunnel entrance and close to Hamilton Square. According to Hinton Properties, the Premier Inn will be the first branded budget hotel in Birkenhead.
The development will be built around Business Premises Renovation Allowance guidelines, which is a government initiative to provide tax relief to property owners for the conversion and renovation of empty business properties.
Hinton Properties, which is based in Warwick, is a privately owned company, specialising in land acquisition and development.
Nicholas Johnston, acquisition manager at Premier Inn, said "This is great news for the local area as the new Premier Inn will create new jobs and help to attract additional visitors to the area, increasing trade for existing local retailers and businesses."
Mark Johnson of MK2 acted on behalf of Hinton Properties.
The development is due to be completed in October 2014. Anglo Holt is the contractor on the scheme.