Budget hotel group Travelodge has exchanged contracts with CHG Holdings for a new hotel in the seaside resort of Ryde, on the Isle of Wight.
Due to open in spring 2014, the £2.2m, 41-bedroom development will be Travelodge's second hotel on the island. It will create 10 new jobs for the town.
Tony O'Brien, UK development director for Travelodge, said: "Our existing hotel in Newport opened in 2007 and trades very well, so we decided that another Travelodge was needed on the island.
"Ryde is the largest town, but has no branded budget accommodation, so we are delighted that Travelodge will be the first company to provide this.
"The new Travelodge will be within walking distance of the ferry terminals in Ryde, so will provide great value accommodation and we believe that our presence in this family-friendly town will encourage more visitors to come and stay overnight, which will serve as a great boost to local businesses and the economy of the area."
Andrew Turner, the Isle of Wight's MP, welcomed the growing presence of Travelodge on the island, saying that it represented "a vote of confidence in the future of our economy".
Travelodge, which has more than 500 hotels in the UK, Ireland and Spain, is now four months into an extensive £57m refurbishment programme, to refit large parts of the existing estate with brand new rooms. By the end of this year, more than 50% of its hotel rooms will have been refitted with 85% incorporating the new design by autumn 2014.