Travelodge is to develop a £5.5m hotel on a site that was previously designated for residential use, marking a first for the budget hotel group.
The site on Greenwich High Road in south-east London was purchased by developer City & Suburban Homes with planning permission obtained for 14 flats.
But, soon after the planning was granted, the original buyer pulled out and no-one else could be found to buy it.
Travelodge stepped in and has now exchanged a contract with City & Suburban Homes and, subject to planning consent being granted, will construct a 97-room hotel.
Paul Harvey, managing director for property development at Travelodge, said: "Since the downturn began we have been offered more than 100 former residential sites but the vast majority are simply not suitable for development as a hotel.
"Clearly Greenwich High Road is an excellent location and I have no doubt this will become one of our strongest performing hotels."
Last year, Travelodge opened six hotels across the UK in buildings that were former office blocks, including a 190-bed hotel at London Tower Bridge and 99 beds in the centre of Wolverhampton.
The group has now opened a total of 22 hotels in office conversions, including sites such as Manchester Central and Watford Central. This year, it will be opening three further office conversions, all in London.
Travelodge will this week start a price-based marketing campaign in an effort to take 400,000 room nights of market share from its rivals during 2009.
The group is targeting £29m of its competitors' revenues by highlighting the "major price gap" between itself and the UK's leading hotel brands.
By Daniel Thomas
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