Jurys Doyle is to spend €34 million on the construction of a new 340-room inn at London Heathrow.

The hotel operator has also announced the sale of the Green Isle Hotel in west Dublin to the Lynch Hotels group for €11 million in cash.

Both initiatives form part of Jurys's ongoing strategy of expanding its "budget-plus" portfolio, while moving out of the three-star full-service market.

The Heathrow project, which was won after a competitive tendering process, will see Jurys enter into a 125-year ground lease with airport operator BAA.

The resulting eight-storey hotel, due for completion late next year, will include a restaurant, bar, meeting rooms and parking facilities. It will be the only hotel on the Heathrow complex to be connected to London by underground.

Heathrow, the world's busiest airport, is located in the centre of a sizeable business district that employs more than 110,000 staff.

Traffic at Heathrow is expected to grow by 30 per cent when the airport's Terminal 5 is completed in 2007.

Jurys chief executive Mr Pat McCann said the ongoing development of Heathrow could provide new opportunities for the group in the future.

"We're very happy that we've finally got Heathrow over the line," he said.

Mr McCann said Jurys had not been "actively pursuing" the sale of the Green Isle but had agreed to the disposal when approached by Lynch Hotels. The company had previously signalled a review of its three-star full-service portfolio, which has now been reduced to three hotels.

He said he was "happy" with the price achieved for the property since it came in above a valuation made in April last year.

The deal marks the entry of Lynch Hotels into the Dublin market.

Lynch managing director Mr Michael B Lynch said the three-acre Green Isle site offered significant development potential. He said the deal had been facilitated with the help of bank finance but declined to elaborate.

Meanwhile, Jurys has also arranged the sale and leaseback of its new Jurys Inn Newcastle with Tyrone-based developer McAleer & Rushe. Jurys will enter into a 35-year lease with the building firm, which will pay €28 million for ownership of the property.

Jurys has pursued a similar mechanism in its plan to open a new 253-bed inn in Dublin's Parnell Street next year.

Analysts said all three developments were in line with the company's stated objectives and were likely to reinforce Jurys's appeal as a defensive stock,

Jurys closed at €7.15 last night, having lost 15 cents in a generally weak market.