Edinburgh’s imposing Royal High School could be transformed into a multi-million pound arts hotel under new plans outlined by developers.

Proposals from Duddingston House Properties (DHP) detail a development plan – designed by architect Gareth Hoskins – backed by £55m ($86m, €70m) from a consortium of institutional investors led by DHP’s Bruce Hare and David Orr of the Urbanist Group.

Hoskins was appointed to oversee a major four-year refurbishment of the Scottish National Gallery in Edinburgh earlier this year and has already completed projects all over Scotland for clients such as Edinburgh Castle, Aberdeen Art Gallery and the National Museum of Scotland, as well as internationally.

A host of speculative uses have been attached to the grade A listed Palladian building since the school moved out 46 years ago, but none, including a Scottish national photography museum backed by Sean Conneryr, have ever come to fruition.

The latest plans for a high-end hotel, which include a restaurant, spa, cafe and public gallery space, have already attracted the interest of three unnamed international hotel operators, none of whom already have a presence in Scotland.

“What we are proposing to do is to add something truly special to the Edinburgh hotel market, by bringing one of the best hotel operators in the world to the city. This will not in any way diminish current hotel provision – indeed it will add another tier at the top which can only benefit all of the city’s operators,” said Orr, chair of the Urbanist Group and founder of Mint Hotels, which he sold to Hilton Worldwide in 2011 for £600m (US$939m, €764m).

Orr was also instrumental in bringing the high profile department store Harvey Nichols to Edinburgh and believes that the proposal for the new hotel has the potential to do for tourism what the department store did for retailing in the city.

Despite the package of private investment drawn up, the site will remain in public ownership on a 125 year lease from the council, which has listed it as one of a dozen pivotal development sites in the city in its Edinburgh 12 document. DHP won an open competition in 2010 to redevelop this site.

When operational, developers say the hotel is likely to create 640 local jobs and contribute an average £27m ($42m, €34m) annually to Edinburgh’s economy. They estimate the hotel could support a further 100 jobs across the country in different sectors including tourism, retail and leisure, and contribute around £32m ($50m, €41m) annually to Scotland’s GDP.

The developers are due to submit their full proposals to the council in January, followed by three days of public consultations at the old Royal High School in February 2015.

Other hotel groups eyeing Scotland as a centre for expansion include Travelodge, which announced £75m ($117m, €95m) worth of investment in 10 new hotels across the region earlier this year.

Last month, French group Accor flagged up a new project for its Ibis chain in Glasgow, plus one for its Mercure brand in Edinburgh and an Adagio aparthotel, also in the city, as part of the New Waverley development.