The new owner of one of the region's leading hotels today unveiled plans to invest almost £2m in a major redevelopment to capture a bigger slice of the tourist market.

A planning application is expected to be submitted in the summer which, if successful, would see Durham's 16th Century Hallgarth Manor Hotel, double in size.

Work has already started on a massive refurbishment of the hotel's ornate gardens and Cathedral Suite, which will be followed in the near future by an overhaul of the restaurant - all designed to allow the historic hotel to compete for visitors with some of the more established venues.

The hotel, in the village of High Pittington outside Durham City, was bought in November by businessman John Khan for £1.5m. Mr Khan, who already owns the Park Head Hotel, at New Coundon, yesterday revealed details of his plans for the site, already one of the region's most popular wedding venues.

Between £500,000 and £750,000 is to be spent over the next five years to redesign the hotel's gardens.

Designer Stephen Laws has trawled the County Archives to find put what the gardens once looked like and restore them to their former glory. Ambitious landscaping plans, including a kitchen garden, rose garden, walled garden and new terraces, along with a new entrance drive and boulevard were outlined at yesterday's launch by Mr Laws.

In addition, £175,000 has been spent on the refurbishment of the Cathedrals Suite, there are plans to spent £250,000 on the new restaurant and the proposed extension, which will see a further 23 bedrooms built if it is given the go-ahead, is estimated at £500,000.

Mr Khan admitted the investment in the hotel, which had been losing money only four months ago, was a gamble. "I bought it more from the heart than the head but, although it was run down there were good staff, which is the most important thing.

"I feel this place is a gem, there isn't any place like it."

Speaking at the launch yesterday John Holmes, director of tourism and regeneration at One North East said: "What is happening here is fabulous. It is a very exciting time. When it comes to tourism, the North-East has fought below its weight for some time and we see it as a major industry which has been undervalued and underestimated in the past."