The new owner of the Grange hotel in Keynsham is planning a major overhaul of the property, which lies between Bristol and Bath.
Wayne Howis of Somerset-based CHH Developments plans to build houses on the land surrounding the hotel and use the proceeds of their sale to fund the revamp.
The property is a Grade II-listed former farmhouse and parts of the original building date back to 1757.
It currently has 29 en-suite bedrooms, including a penthouse bedroom with a four-poster bed and three more four-poster bedrooms.
The property also has three dining and lounge-bar areas and a detached two-bedroom owners' bungalow with its own front and rear gardens
Howis intends to enlarge the main restaurant to 120 seats, boost the bedroom tally to 40, revamp the interior, add a wine bar at the front, and increase the car parking space.
The Bristol office of Christie + Co sold the freehold off an asking price of £1.3m on behalf of Andrew and Cyndi Bell.