ONE of York's most prestigious hotels is to be turned into luxury flats, the Evening Press has learned.

The award-winning Ambassador Hotel, in The Mount, has been sold to developer Emblem Homes, which has submitted an application to create eight apartments and two town houses at the site.

York tourism chiefs said today its closure would be a "big loss" to York. It is believed the building could be worth up to £2 million.

The Evening Press recently reported that Robert Morrison Antiques was selling its nearby headquarters for housing.

Sally Gray, who bought the Ambassador 15 years ago with her partner, David Miller, says she plans to retire.

"None of my family were interested in continuing with the business," she told the Evening Press.

"These buildings cost the earth to maintain. Any money you make has to be ploughed straight back in.

"I've had some really loyal staff who will all have a job to go to. We've been a really good team.

"I will be sad to see it go."

The Grade II listed building dates back to 1826 and has 1.5 acres of gardens at the back.

The Ambassador has 25 rooms and conference facilities as well as Gray's restaurant.

Kay Hyde, PR manager for York Tourism Bureau, said its closure would be a blow to the city's hotel industry.

"It would be a big loss for York," she said.

"We've worked with the hotel for many, many years.

"It's a hotel of character that offers visitors something a bit different from the budget hotels.

"I imagine the overheads in an old building like that are huge.

"It's a sad loss for our industry."

Mr Miller said: "We were very careful to ensure that the buyer had some regard for the building.

"We had a number of offers for it.

"The Mount is predominantly residential anyway and I think the hotel will look a lot better when it goes back to being residential.

"We've got a lot of happy memories."

Emblem Homes has applied to turn the Ambassador's end two buildings into town houses and the main Georgian property into eight luxury flats.

Updated: 11:19 Friday, May 30, 2003