This follows the acquisition of a prime location at 28 St Andrew Square, previously the site of Virgin Money premises. The proposed Clayton property, one of Dalata’s brands, will feature 153 rooms, creating approximately 60 new jobs once it’s operational.

The development site was acquired for a total consideration of £12.5m from Aviva Life & Pensions UK Limited. The consideration was paid from Dalata’s existing cash and banking facilities.

The site includes a category A listed building which is currently vacant and approved for office use, with planning permission granted for an extension to both the rooftop and rear of the property. The group plans to submit a revised planning application in Q1 next year, enabling the construction of a new 4-star Clayton Hotel, which is expected to be completed by mid-2026.

The group’s hotel scheme is designed to work within the new building envelope permitted under the existing planning permission. Subject to a successful revised planning application the hotel will incorporate 153 bedrooms, a bar, restaurant, dry gym and two large meeting rooms on the first floor overlooking St. Andrew’s Square.

The overall investment in the project, including the site purchase, will be approximately £48m, creating some 60 new employee positions when the hotel is operational.

The new hotel will be one of our first to be designed to operate with zero on-site carbon emissions. As a conversion scheme, it will also have considerably lower embodied carbon than a new build.

Dermot Crowley, CEO of Dalata, said: “Edinburgh has long been a target city for us to locate our brands and we are delighted to have secured such a prestigious building in the centre of the city. This will be our third hotel in Scotland.”

Shane Casserly, corporate development director at Dalata, added: “Edinburgh is one of the top performing hotel markets in Europe and we are delighted to secure a development site in such a prestigious location.

“Our development team has extensive experience and history in delivering complex projects, we look forward to collaborating with Edinburgh authorities, to deliver a flagship Clayton hotel with zero onsite operational carbon by mid-2026.”