WORK has started on the latest Liverpool city centre hotel scheme.

The plan to build a 123-bedroom hotel on Dale Street was first unveiled two years ago.

The £10m project to restore a disused building is expected to be completed by 2013. Northern Irish developer Benmore Group says it has signed up a major hotel brand to operate what is thought by some local observers to be a budget hotel.

The scheme, however, has rekindled concerns about the oversupply of hotel rooms in the city.

The scheme will see the retention, renovation and safeguarding of the historic façade of the Pioneer Buildings, which is not listed but is in the Castle Street conservation area, and is the boundary of Liverpool’s World Heritage Site.

The scheme includes a car park, which will have just under 300 spaces behind the hotel, together with retail space on the ground floor.

Malcolm Kennedy, Liverpool City Council’s cabinet member for regeneration and transport said: “This is a high-profile street which has languished too long. This will help to transform the entire street and improve the entire environment. It’s long overdue and extremely positive.”

Benmore chief executive David Burrows said: “We believe this proposal offers the right blend of assets for a street which is in danger of missing out on the regeneration which has benefited so much of the city centre over the last four to five years.

“There is undoubtedly a demand for further quality hotel beds in the city, and we believe our investment will help to attract other investors and to encourage plans which may be on hold at the moment.”

However, his views are not shared by others in the city’s hotel industry.

Mike Dewey, chairman of the Liverpool Hoteliers Association, has previously claimed there are already too many hotels in the city.

Mr Dewey, general manager of the Hard Day’s Night hotel, told LDP Business: “The city is swamped with budget hotels, and then you get the cry that the city is full of stag and hen parties.”