Madrid has been targeted by super budget chain easyHotel as part of European expansion plans.
A freehold site has been acquired in the Spanish capital to develop the company’s second hotel in the country after Barcelona at a cost of €28 million.
The 230-room property is due to open in the 2021-22 financial year.
The company currently operates a portfolio of 40 owned and franchised hotels across the UK, Europe and Dubai.
Interim chief executive Scott Christie said: “Our new investment in Spain marks the latest step in our strategy to expand our owned hotel network across centrally located, high quality sites in major European cities.
“Madrid is an iconic destination with numerous attractions for both tourist and business travellers, and we are confident our super budget offering will resonate with visitors keen to experience Spain’s capital.”
He added: “The group continues to make good progress towards securing sites in its target destinations and we look forward to announcing further developments in due course.”