The Grade II-listed Beverley Arms in Beverley town centre was acquired by hotel, pub and inn group Daniel Thwaites in 2016.
Thwaites has now commenced work on a redevelopment to create 38 bedrooms, a pub and a restaurant, after securing planning permission.
“It’s fantastic to finally see activity taking place at The Beverley Arms,” said Rick Bailey, chief executive at Thwaites.
“Work is progressing well and anyone who has walked past recently may have already noticed a significant difference.
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“It’s going to be fantastic to see the project when it’s completed and we are looking forward to opening next year.”
The demolition stage was completed late last month with the removal of a five-storey bedroom block at the rear of the building.
Work to refurbish the existing building and develop the new bedroom extension is expected to begin shortly.
The project was designed by Bowman Riley Architects, with engineering by Adept Consulting Engineers and Philip Lally as the main contractor.
“The Beverley Arms is a stunning three-storey Georgian building directly opposite St Mary’s Church, which is widely recognised as one of the most beautiful churches in the country,” added Jonathan Ashton, principal engineer at Adept.
“However, the 1960s five-storey tower was both intrusive and completely out of keeping with the historic surroundings.
“It’s great to see this demolished and being replaced with a three-storey structure that very much complements the original building.”