The establishment, which is set to receive £7.9m of investment from its developer Northumberland Estates, will convert buildings two through eight Bailiffgate and add an extension to the rear.
Upon completion, the hotel will comprise 47 rooms, a restaurant, a bar, a fitness centre, and meeting rooms, as well as a 51-space car park.
By developing the site, which has remained empty since 2016, Northumberland Estates hopes to inject “tourists directly into the town centre”.
Guy Munden, development planner at the company, said: “This project seeks to create the extra visitor accommodation the area has been shown to need as well as bringing new jobs to the town.
“With more visitors looking to come to Northumberland even in the winter months, the hotel should bring a welcome boost the town’s tourism trade.”
Construction to the site could begin in Spring 2021, providing a number of jobs to the local area before the hotel is operational.
Munden added: “The hotel is also a huge construction project, and we are keen to involve as many local business and tradesmen as possible during the building phase, hopefully providing a much-needed boost to employment in the area at this very difficult time.”