The new Holiday Inn and Suites will boast 148 rooms on six levels and the heritage-listed Murrumbidgee Flour Mill and Grainstore will be a component of the development.

Mayor Greg Conkey said he is "delighted" the city's largest hotel is only a couple of years away as it has been a long time coming since it was bought in 2011.

"It's really good news, very well located and shows a lot of confidence in this city," Cr Conkey said. "It's very well located, right opposite Robertson Oval, just up the road from the railway station, on the Sturt Highway and near the Bolton Park master plan which is coming into fruition, so this will be an intricate part of that area as well.

"The hotel includes 148 rooms, conference facilities as well as all-day dining and a piazza."

The InterContinental Hotel Group has partnered with Interlink Australia and the hotel is anticipated to create 120 to 150 jobs during construction and approximately 70 ongoing positions once the hotel opens.

Cr Conkey said this development was needed to accommodate the thousands of visitors who attend Wagga's events each year.

"We don't have one huge festival each year, we have many large festivals and events," he said. "A couple of weeks ago we had the Touch Football conference where about 10,000 people came and only last weekend was Mardi Gras, which saw about 12,000 people.

"We have other events, such as Food and Wine, Gears and Beers, Spring Jam, Fusion and Lost Lanes, so we need accommodation to support those events."

Committee 4 Wagga chairperson Michael Quirk said the size of the hotel will accommodate more events. 

"It's fantastic to be able to tidy up one of the eyesores in Wagga that has been around for a long, long time and this company is already started the process of starting to tidy up that over the last five years, but this will complete that exercise," he said. 

"This allows for a lot more conferences and more opportunities into Wagga, as people might not have had a conference here because we couldn't cater for them." 

Glen Oakman has two Airbnb properties, an apartment and penthouse, at The Mill Residence and said he is "not at all" concerned by the construction. 

"The apartments are built really well and when you're inside them, there's virtually no outside noise so I can't see where construction would be an issue," Mr Oakman said. 

"I don't see the hotel competing with Airbnb's as I think of hotels offering different accommodation, as I cater more to families coming to stay."

Mr Oakman said Wagga needs to increase the number of hotel rooms available in order to meet its target as a growth city. 

"Wagga is falling behind with the number of hotel rooms available when compared to similar towns with a population of 100,000," he said.  

"I think this will be a good thing for Wagga as we need more accommodation and an extra hotel being built will certainly service the needs of visitors travelling here.

"The touch football carnival saw people having to stay out of town so building more accommodation will mean less people are inconvenienced." 

Similarly, Destination NSW general manager Richie Robinson welcomed the hotel as in the last couple of years local events are attracting people from out of town. 

"We do believe Wagga is a growing city and the accommodation capacity is an outcome of that," he said. 

"It's common now for some of the bigger events, like Touch Football Carnival and Gears and Beers to book out Wagga's accommodation capacity in Wagga. 

"This has forced people to stay outside of the town, which is not ideal as we want people to spend money in Wagga's restaurants and cafes." 

InterContinental Hotel's senior development director for Australiasia Abhijay Sandilya said the construction is expected to commence in the next six months and will take between 18 to 24 months to complete. 

"The hotel's suite is intended for long-staying guests and families which will take the heritage component of The Mill, where as the hotel component will provide rooms for visitors to the city," Mr Sandilya said.