An investment of over £3 million will develop the former Castlewellan Guest House into Hillyard House, a 20 room facility with a 90-seater restaurant and bar.
Local retail firm Fresh Food Centres is behind the investment, which will create 11 additional jobs and is expected to be completed by February 2020.
The company is well known throughout Castlewellan, with a supermarket, petrol station and ecological retail store, along with another retail establishment in Warrenpoint.
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Announcing the new hotel, Michael Johnston, Operational Director of Fresh Food Centres, said: "The redevelopment of Hillyard House is a significant investment for our company and one which we believe will deliver generous economic benefits for the local region. Our vision of a high-end Guest Inn will be a unique offering for the area.
"Being positioned in the heart of the town, close to Castlewellan Forest Park, means that we will be attractive to tourists exploring the region."
Alongside the 11 full-time jobs, the new development will also create 26 part-time positions for the area.
Invest Northern Ireland has committed £300,000 to the redevelopment.
John Hood, Director of Food & Tourism at Invest NI, said: "The redevelopment of the old Guest House is a welcome boost for the local economy and will enhance the tourism offering within the County Down area.
"With many tourist attractions nearby, Hillyard House will capitalise on this to boost the Northern Ireland tourism industry further through overnight trips to the region. Furthermore, the economic benefit also includes the creation of 11 jobs as well as employment generated through the construction phase."
(JG/CM)
