The Swinside Lodge hotel near Derwent Water, Keswick, in Cumbria, has changed hands.
The eight-bedroom Georgian property is in the Newlands Valley and surrounded by fells.
Facilities include an 18-seat dining room, sitting and drawing rooms, and two bedrooms for staff use.
The business has planning permission to convert outside garages, stables and dog kennels into a two-bedroom house for use by the hotel.
The hotel has recently collected seven awards, including the Small Hotel of the Year 2007 from Cumbrian Tourism and a ranking as one of the top 300 restaurants in the UK for its two-rosette restaurant.
Knight Frank sold the freehold off a guide price of £1.1m on behalf of Eric Fell and his wife. The new owner is Mike Bilton and his wife.
By Angela Frewin