The 50-room Fountainside Hotel will be converted to student accommodation after being sold to the University of Tasmania (UTAS).
University spokesman Jason Purdie said the acquisition is part of a plan to deliver 300 new student beds in Hobart this year.
“The Fountainside will be fitted out over the break and will house almost 100 students,” he said.
The deal means 30 staff will be laid off. Tony Giacon, head of the hotel’s company, says he held off going public with the deal until all the staff had been informed.
“The thing we were most worried about during this last four weeks was that our staff didn’t find out before Christmas,” he said.
“The last thing we wanted to do was sit down on Christmas Eve with our staff and say that their jobs wouldn’t be here.”
Staff will continue working at the hotel until UTAS takes possession on February 12.