The multi-million pound deal is believed to involve a chain takeover by leisure giants Travelodge, which runs more than 330 hotels across the UK, Ireland and Spain. An announcement is expected soon by staff at the Scarborough hotel.

But neither the hotel nor its current owners can be revealed at this stage of the negotiations.

Greg Dawson, Travelodge director of communications, would only say: "We would very much like a hotel in Scarborough and are looking at a number of opportunities. The town attracts a good mix of both leisure and business travellers and has a great seaside tradition."

Travelodge is the fastest-growing budget hotel chain in the country and is planning to open 40 more hotels this year. Apart from the imminent hotel chain big deal, the company was previously interested in building a development at the former site of Boothby's garage, at the corner of Vernon Road and Falconer's Road, but lost out out to rival hotel group Premier Inn, owned by the leisure giants Whitbread.

It is believed this new hotel development will comprise 75 bedrooms and a restaurant on the ground floor.

In addition, Premier Inn has also been given the go-ahead for a new 37-bedroom hotel at Scalby Manor, next to where it has run a Brewers' Fayre restaurant since 1994.

Premier Inn was previously called Premier Travel Inn but dropped 'Travel' to avoid confusion with other chains such as Travelodge. The Whitbread chain also includes Beefeater, Costa Coffee and the David Lloyd health clubs.

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