Developers want to spend more than £20 million transforming Worthing's second largest hotel into a luxury four-star spa complex.
But part of the art deco Beach Hotel in Marine Parade would be turned into private flats to help pay for the scheme.
The proposals have been revealed by Worthing-based building firm Roffey Homes which has already built the acclaimed Warnes apartments on the site of the Warnes Hotel in Marine Parade.
Roffey is also planning to spend £15 million on Eardley, another luxury flats complex on the site of the now demolished Eardley Hotel overlooking Splash Point in the town.
The firm has entered into an agreement with the Farnes family, who have owned the Beach for almost 90 years.
In a joint statement they said the aim was to create a contemporary hotel designed for the 21st century which would help to rejuvenate the seafront and attract new visitors to the town.
A planning application is likely to be submitted to Worthing Borough Council later this year, following a series of public consultations.
In the meantime the Beach will continue to take bookings for this year and 2010.
Roffey said it wanted to develop a hotel equipped with the latest facilities including a swimming pool, health spa and treatment rooms.
The plans also included a number of adjoining apartments where residents will enjoy concierge facilities.
An award-winning firm of architects –Devereux Architects - had been commissioned to design the development.
The Beach currently has 80 bedrooms - 45 doubles and 35 singles - and employs 50 full and part time staff.
It was originally built around 1860 as a row of Victorian terraced houses which during the Great War became the Prince Albert Convalescent Home for wounded soldiers.
It was converted into the Beach Hotel in 1935 when the existing art deco façade was added.
Jonathan Farnes, the managing director of the hotel, said: “This building has done us a great service over the years, but it’s reached a stage where it requires significant investment to take it forward.
“We considered renovating it, but, because it was originally designed for another use a long time ago, there is a limit as to what’s achievable and the cost would be astronomical.
“We need to think about the future of the hotel and believe the proposed redevelopment by Roffey is the best solution for Worthing. “ Ben Cheal, the managing director of Roffey, said: “This is an incredible regeneration opportunity for Worthing.
Keith Mercer, the leader of the borough council, said: “I certainly welcome it.”
Last year Travelodge took over another large Worthing seafront hotel, the Berkeley, and spent £3 million converting it into a budget hotel.
The privately run Chatsworth Hotel in Steyne Gardens is Worthing's largest, with 98 bedrooms.