The deal will unlock an opportunity for reinvestment and redevelopment of the site, underpinning choice and supporting the leisure economy in the town.
The new scheme - recently granted planning permission by Allerdale Council - will create more than 50 jobs for hotel and restaurant staff, another 25 posts in the supply chain and a further 68 in construction, giving a total of almost 170 jobs.
Construction of the Premier Inn, Brewer’s Fayre restaurant and associated car parking is due to begin in May with completion expected in early 2017.
Nick Johnston, acquisition manager for North West & Wales at Premier Inn, said: “Investing and regenerating existing hotel sites to offer great quality and value hotels is something we take great pride in – The Shepherd’s Hotel will be a great example of that.
“We are looking forward to coming to Cockermouth, creating new jobs, supporting the local economy and strengthening choice in the market.”