The owners of CH on Peel have submitted a development application to Tamworth Regional Council for a $5.8m expansion onto the neighbouring block, which was the old BWS liquor store, on the corner of Brisbane and Dowe streets.

The five-storey building proposal includes 33 hotel units over two levels, a new entrance lobby and reception area.

Each of the 32-square-metre hotel rooms will have a fully enclosed balcony. The internal fit out is expected to cost an additional $3.5m.

Along with the 33 rooms, the fourth floor will have a two-bedroom unit for the hotel manager, while the top floor will have two three-bedroom penthouse apartments and a garden terrace.

There will be two levels of underground parking, with 45 spaces for guests and eight for staff.

CH on Peel owner Jye Segboer said it had always been a vision to expand the hotel, which has a 90 per cent occupation.

“There is a real need for more accommodation in the CBD, where visitors can experience what Tamworth has to offer without driving or getting in a taxi,” Mr Segboer said.

“Most people want to stay in the CBD so they can walk to other restaurants and and cafes.”

Once the DA has been approved, the construction is expected to take 12 to 14 months and will be carried out by a local company.

“We're hoping to be open for the 2018 Country Music Festival,” Mr Segboer said.

Once the redevelopment is finished, the hotel will employ six full-time staff and nine casual staff.

Tamworth Region mayor Col Murray said the proposed development was further good news for the future growth of local tourism. It follows the $7m redevelopment of the Quality Hotel Powerhouse, while the $12m Mercure hotel will open before the end of the year.

While the DA is still yet to go before the council, a separate application to demolish the old BWS was approved in June.