HIS DUBLIN-based Morgan and Beacon boutique hotels might be feeling the chilly breeze of recession, but that hasn't deterred Irish hotelier Paul Fitzpatrick from pressing ahead with plans to develop a £40 million (€50.6 million) 165-bed property in Edinburgh.

Plans for the scheme were submitted to Edinburgh City Council this week and Fitzpatrick is confident that planning approval will be granted.

"We've had a very positive response from the council and we don't envisage any major issues there," he told me by phone from the United States, where he was helping his brother and fellow hotelier John celebrate the conferring this week of an OBE by the British ambassador in Washington.

"We've also met the residents and it's been received very positively."

Fitzpatrick expects approval to be granted in January, with the four-star hotel slated to open in advance of Edinburgh's major festival in August 2010.

Fitzpatrick says he is well down the road to securing bank funding and is confident that the new hotel will thrive in spite of the economic gloom.

"The UK is not untouched from what's been happening, but Edinburgh is still strong and it's second only to London in terms of rates and room occupancy," he says. "We've been fairly conservative in our [business] plans and we're confident that they stack up."

On the plus side, Fitzpatrick expects to achieve savings of up to 20 per cent on building costs due to the construction sector slump.

The project involves the refurbishment of three adjoining Georgian houses on Baxter's Place, close to Edinburgh's city centre. The hotel will include a penthouse suite, a 150-seat restaurant, a cocktail bar and conference rooms.

Fitzpatrick is from good hotel stock. His parents were hoteliers, while brother John owns two properties in New York and sister Eithne runs the Killiney Castle in Dublin.

Paul owns the Morgan and Beacon hotels in Dublin, which employ about 120 staff between them and have combined revenues of about €12 million.

He says occupancy rates have held up well this year in the high 70 per cent, but average room rates are down about 10 per cent.

"There's another bad year ahead of us, but we're still making a good profit. There's business to be done."

With Ireland saturated by hotels, Fitzpatrick is hoping for other openings in Britain.

"We are looking at a couple of sites in Manchester and we'd love to be in London."