The Alhambra Court Hotel in St Mary’s has been a family run business since the 1980s, but it has been closed since last autumn and the signs removed from the outside of the building.
The owners have now applied for planning permission to turn the building on one of York’s most sought-after streets into two family homes.
They say it has become “increasingly difficult to compete” with the number of new hotels in the city.
York saw a 71 per cent increase in tourist accommodation between 1999 and 2014, according to a report.
And the most recent figures published by Visit York say in 2018 the amount of tourist accommodation in the city had grown to 48 hotels, 130 B&Bs and 145 self-catering properties.
A number of large chain hotels have opened since – including Malmaison in Rougier Street, Moxy in Black Horse Lane, Hampton by Hilton in Piccadilly and Roomz Aparthotel in Terry Avenue.
Several other hotels are set to be built, including a new Premier Inn in Layerthorpe, a Marriott in the former Banana Warehouse in Piccadilly and an aparthotel in Micklegate.
A planning statement says the owners of the Alhambra Court Hotel considered increasing the number of rooms at the site, but that it was not possible.
It says: “The impact of COVID upon the effective operation of the premises has resulted in the business ceasing to function during the autumn/winter of 2020 and remains closed to date.
“The proposal would result in a loss of a moderate amount of visitor accommodation. However, this is not considered to impact on the overall supply and therefore choice of visitor accommodation in the city centre, especially given the increase in recent years of Airbnb lettings and granting of major hotel developments.”
The closure has meant the loss of eight full time equivalent jobs.
The owners say that converting the hotel back into family homes will mean less disruption for neighbours, because the hotel has a well-used car park and the street is mostly residential.
Under the plans, the property would be turned into two homes and private gardens would be created as well as space for each house to park four cars. The homes could have up to 10 bedrooms across four floors.
St Mary’s was named as one of the most expensive places to buy a home in York last year.
In September 2020 property company Zoopla said the average price of a house in the street was £703,093.