Mr Matthews-Williams said: “I think it is all about having the right product in the right location and with the right management.

“I think it will provide good competition for the existing boutique hotels in the city.

“The difference with this hotel is that it will have the backing of IHT’s global reservation system.

“Major factors in our decision has been the success of the Liverpool Echo Arena and BT Convention Centre and Liverpool One. Their effect on the city has been phenomenal.

“Without them, I don’t think we would be embarking on this project.”

The seven-storey hotel will be built on land behind office building Yorkshire House, at the junction of Chapel Street and Rumford Place.

Financial backing for the scheme is being provided by Downing Corporate Finance and the Co-operative Bank.

Hotel Indigo is IHG’s newest hotel brand. There are 27 hotels open in North America and 59 more are planned around the world.

The brand began its global roll-out earlier this year with the opening of Hotel Indigo London Paddington, in January.

IHG has seven of its hotel brands operating in Liverpool including one Holiday Inn, three Holiday Inn Express hotels, two Crowne Plaza hotels and one Staybridge Suites serviced apartments property.