The Grade I-listed Georgian townhouse is part of a terrace built in the 1740s by John Wood in the city centre.
It overlooks Parade Gardens and the River Avon and is near Bath Abbey, the Roman Baths and Pump Rooms, and the new Southgate Shopping Centre whose first phase opens in 2009.
Made up of three adjoining stone townhouses, the hotel offers 40 bedrooms, a residents' lounge, an 85-seat panelled dining room on the first floor, and the 50-seat Lambretta's Bar on the first floor, with more seating outside.
A separate restaurant at the front of the main building is leased to a local operator.
The Bristol office of Christie + Co sold the freehold on behalf of Dave and Nita Derrick.
By Angela Frewin