A Co Down retail company is to invest more than £3m to develop a former Castlewellan guest house into a four-star licensed inn, creating 37 jobs.
Fresh Food Centres will redevelop Hillyard House to include 20 ensuite bedrooms, a 90-seater restaurant and a bar and expect to open in February 2020.
The move will create 11 full-time jobs as well as 26 part-time roles. It will start taking bookings next month.
Economic development agency Invest NI has offered the business £300,000 towards the redevelopment.
Michael Johnston, operational director of Fresh Food Centres, said: "The redevelopment of Hillyard House is a significant investment for our company and one which we believe will deliver generous economic benefits for the local region.
"Our vision of a high-end guest inn will be a unique offering for the area. Being positioned in the heart of the town, close to Castlewellan Forest Park, means that we will be attractive to tourists exploring the region.
"The support we have received from Invest NI has been invaluable and has enabled us to press ahead with the development, which is well under way. Alongside the 11 full-time jobs, the new development will create 26 part-time jobs."
The company said it has a good supply chain from its retail business and hopes to bring its own produce to the table in the restaurant.
The firm will also seek to showcase other produce from the area including baked goods from the popular Cookie Jar in Newcastle and beer from Whitewater Brewery in Castlewellan.
Hillyard House will also seek to offer a more "personalised" experience than other hotels in the area.
Fresh Food Centres is well-known throughout Castlewellan, with a supermarket, petrol station and ecological retail store, along with another store in Warrenpoint.
John Hood, director of Food and Tourism at Invest NI, said: "The redevelopment of the old guest house is a welcome boost for the local economy and will enhance the tourism offering within the Co Down area.
"With many tourist attractions nearby, Hillyard House will capitalise on this to boost the Northern Ireland tourism industry further through overnight trips to the region."
He added: "The economic benefit also includes employment generated through the construction phase."