Work has started on a 151-bed four-star luxury boutique hotel on Chapel Street in Liverpool city centre.
A £10m funding package for the project was provided by The Co-operative Bank's Liverpool Corporate Banking Centre.
The £15m hotel will be developed by Simon Matthews-Williams' Sanguine Hospitality under the InterContinental Group's Hotel Indigo brand, which will be the third of this type in the UK. The hotel is scheduled to open in spring next year.
The Co-operative Bank and Intercontinental Hotels visited the site last week to officially mark the onset of work by contractor Denizen.
Nick Taplin, managing director at Sanguine Hospitality, said: "Merseyside's tourism economy is worth over £1.4bn and rising. In spite of one of the worst recessions in recent times, the city region continues to grow as a destination of choice for domestic and international visitors.
"Our level of investment in Hotel Indigo reflects our level of faith in the city and the direction it is taking. We intend to bring something new and creative to Liverpool's hotel market, giving visitors a real alternative and further strengthening the city's appeal.
"The commercial district offers an excellent location, with a real sense of place in the heart of the city and situated perfectly to welcome both business and leisure guests."
Dave Matthews, senior business development manager at The Co-operative Bank's Liverpool Corporate Banking Centre, added: "We are delighted at being involved in bringing this exciting new hotel brand to Liverpool. At a time when some banks are still not able to provide significant funding like this, we were able to work closely with what is a very experienced and capable management team to deliver a financial package that exactly meets their requirements."
Falconer Chester Hall Architects and its associate company, FCH Interiors, were appointed to design the build and interior design of the new hotel.
The Indigo hotel will be built on an infill site between Yorkshire House on Chapel Street and 1 Old Hall Street, home of Liverpool Chamber of Commerce.
The site was formerly owned by developer Vermont Developments which planned a speculative office building before the downturn. Vermont Developments was put into administration in August 2008 after a residential development in Salford stalled.
The new hotel will feature an internal courtyard as well as a ground floor restaurant, bar, gym and café amongst its facilities.
Mark Doohan, FCH director, added: "Chapel Street was one of the five key streets of the city, at the centre of the city's mercantile activity and cotton trade especially, with a concentration of cotton trading and storage houses.
"We wanted to reflect upon this context to fix the scheme in its locality and to tell the story of the city's growth around the Chapel Street area, driven by the historic links with America and the cotton trade.
"So the facade and, of course, the interior draw their inspiration from cotton's textures, weaves and colours, echoing a key strand of the hotel's brand DNA, which is about being refreshingly local and telling intriguing stories.
"Indigo is going to be a landmark development for the city's historic centre, drawing on its waterfront and maritime heritage in a contemporary but respectful way. We're delighted to be involved."
The first Hotel Indigo brand hotels were opened in 2009 in London Paddington and Glasgow.
Sanguine Hospitality is committed to expanding the Hotel Indigo brand across the UK and Hotel Indigo Newcastle will follow Liverpool's opening in spring 2011.