It has been reported that a hotel chain could shortly reside on Edinburgh's Royal Mile.

If plans are approved, two Premier Inn hotels – with a combined total of 257 rooms – would be constructed as part of the £150m Caltongate project, STV has reported.

The agreement is between Artisan Real Estate Investors and Whitbread, which owns Premier Inn. The hotels are expected to be part of a wider £150m mix of leisure, retail and offices which would link New Street and East Market Street with Waverley station and the Royal Mile.

It will be centred around a £6.5m civic square with office space, 28 retail units, 145 residential units and 40 affordable homes.

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Planning permission is still to be approved for the site, but building work is expected to being from 2014.

John Bates, from Whitbread Hotels, is quoted as saying: "This is another outstanding deal for Premier Inn. It gives us more than 257 new bedrooms in central Edinburgh and also our first new Hub by Premier Inn outside London.

"We are now set to have two great Premier Inn products side-by-side in a superb new development in the heart of the Old Town - and close to Waverley Station. It is more exciting growth for us in Scotland and another big result for our customers."

Managing director of Artisan, Lukas, Nakos added: "There has been huge interest in the site from hotel operators around the world, and I am pleased that an operator of Whitbread's stature and pedigree has chosen to significantly invest in the city.

"High quality hotel provision will be the cornerstone of our development, and it's great to see how innovative leisure concepts such as the Hub will add vibrancy, excitement and colour to our plans. We will be placing strong emphasis on the quality of design and materials to ensure both hotels reflect their historic Royal Mile setting – as well as ensuring that the wider area benefits from the increased visitor spend."

(JP/CD)