Construction work has begun on the £25m Hampton by Hilton York Piccadilly hotel, due to be completed in the first quarter of 2021.
Avantis Hotels, which owns and operates the Hampton by Hilton York, also owns the site being developed into a 143-bedroom hotel. It most recently housed offices, a car park and a motorcycle accessory shop.
The hotel is expected to create more than 50 full- and part-time jobs. The site will also include eight luxury private residences.
Ravi Majithia, Avantis Hotels' development director, said: "The Hampton by Hilton York Piccadilly is an incredibly exciting prospect and a significant investment for us. We are confident it will help breathe new life into a part of York that lacks activity yet has envious views overlooking the River Foss, facing one of York's most popular attractions."
Anthony Mackle, sales and marketing director at developer Newby, said: "It's fantastic that this area of Piccadilly is being regenerated with such high-quality schemes.
"It occupies such an enviable position in the heart of York and yet it seems to have been forgotten for many years. Now to have both Ryedale House and its 77 luxury apartments, along with the Hampton by Hilton York Piccadilly hotel, it can come alive once again."