''This is a hugely important day in the history of the ILT ... It's fantastic to finally say we're doing it,'' ILT general manager Greg Mulvey said of the announcement made yesterday.
The 120-room, possibly six or seven-storey hotel will span 3000sq m from its car park at 11 Don St, the site of the former Invercargill Public Library, to bar Barluca, in Dee St.
The first stage of the development, which will begin soon, will cost up to $40 million.
The trust had investigated several CBD sites, including the former Southland Times building in Esk St it bought last year.
But the site chosen was determined to be the optimal location because of its capacity to be future-proofed, internal access car parking and vehicular egress, Mr Mulvey said.
The site was already owned by the trust and the recent purchase of 11 Don St had completed the property acquisition required.
The board had approved a budget of up to $40million for stage one of the build, sourced from its financial reserves.
He was reluctant to state the hotel's intended star rating but said it would have the ''wow factor''.
To be profitable, the hotel was intended to attract a broad range of guests, including those from tourist and commercial markets.
The design would influence the final costing but ultimately the hotel would be an asset the city could be proud of and would help Invercargill grow as a destination, he said.
ILT board chairman Alan Dennis said the chosen site was undoubtedly the best option, particularly given the synergy with other proposed developments for the CBD.
''Location, location, location - this will have a real visual impact when people come into the city.''
The multimillion-dollar investment reflected the trust's faith in the city's future.
''The time is now right and it's our belief this will act as a catalyst for further inner-city developments and rejuvenation.''
Construction of the hotel would be completed in two stages. The first stage would feature 80 guest rooms, function/conference facilities, restaurant, bar, cafe and car parking. Stage two would include an additional 40 rooms when demand warranted it.
Mr Mulvey said feasibility studies found 80 rooms was the optimal number but the infrastructure would be in place to enable another 40 rooms to be added if required in future.
The trust has been considering building a new hotel in the city for more than five years.
''But it had to make commercial sense to do it. Up until now we couldn't justify it.
''We had to be economically responsible because we have another role to maintain our financial contributions to the community in years to come ... but we have faith we will continue to benefit from the spillover experienced during the past year from Central Otago and that has given us the courage to do this.''
Mr Dennis said the ILT would continue to reinvest in its other facilities and maintain its annual level of grant funding.
Obtaining demolition consent from the Invercargill City Council was the next step.
Once consents had been granted, the physical build was expected to take about 18 to 24 months.
-By Petrina Wright
