The Hilton full-service five-star hotel, with more than 100 rooms, is being developed by the Auckland-based McEwan Group.
The former chief post office development is expected to be worth $85 million on completion and is targeting a minimum 70% occupancy rate, employing about 130 staff - half in full-time and half in part-time positions.
The lack of five-star facilities and overall bed numbers has been a constraint on tourism in Dunedin for several years, with some visitors having to stay in places as far afield as Ashburton and Gore when major events were held in the city.
Hilton Hotels Australasia vice-president Ashley Spencer will make a formal announcement in Dunedin on Monday about Hilton signing a more than 10-year management contract at the chief post office.
Mr Spencer said Dunedin was seen as a ‘‘strategic'' hotel site within Hilton's ‘‘aggressive expansion'' plan, which now encompassed a network of 3500 hotels around the world.
Hilton wanted to ‘‘feed'' United States travellers into the Hilton network through Australia and on to the expanding New Zealand Hilton network.
"I'd be very disappointed if we weren't able to boost tourism [in Dunedin] 10% to 15%,'' Mr Spencer said.
Ministry of Tourism figures for the year to January showed there were a combined 525,245 domestic and international travellers to Dunedin in commercial accommodation - equating to 897,750 visitor nights spent in the city.
Hilton has more than 100 hotels planned for Australia and New Zealand in the next few years.
Developer Dan McEwan's hotel proposal is the fifth to be announced in the past 14 years involving the 1930s seven-storey, granite-clad post office building. None proceeded beyond the initial purchase of the building.
Since the latest project was announced in August 2006, the start of construction had been steadily delayed as other McEwan Group projects took precedence. The delay was compounded by a tradesman shortage in Otago, with the July start date likely to be amended.
‘‘We're in the hands of the constructors. Realistically, I reckon it will be about 18 months before it is opened,'' Mr Spencer said.
It would take about three years' operation to reach a minimum ‘‘general'' occupation rate target of "‘at least 70%'', he said.
He acknowledged the general economic malaise facing US and European economies was making investors and developers think harder about hospitality investments.
Mr McEwan yesterday said a construction update and full details would be announced on Monday at the Hilton function. Mr Spencer said Hilton had a ‘‘full technical services team'' working with the McEwan Group to ensure the ‘‘rigorous'' Hilton design standards were met.
The early March date for 111 Hilton Dunedin hotel rooms to go on the open market had been put back to April. The rooms were expected to range in price from $280,000 to $380,000 or more, and would be managed on behalf of owners by the Hilton chain, Mr McEwan said.
Most of the development's 34 apartments had been sold off the plan, with one likely to be valued at $2 million, including the sale price and fit-out costs.
Auckland-based Mr McEwan bought the building from Te Anau hotelier and businessman Geoffrey Thomson for an undisclosed sum.
The proposed redevelopment included a mix of more than 125 five-star hotel rooms, retail, leisure and hospitality areas, a business centre and apartments.
