Building on the Lord Street site could start by the end of next year, subject to planning approval.
Negotiations with the selected operator and preferred developer for a four star hotel complex are in their final stages, according to Tourism and Leisure Minister Adrian Earnshaw.
Consultations for the project got underway in July of last year, after the idea was first proposed in 2004.
In Tynwald today Mr Earnshaw (pictured) said so far government had spent ?105,000 on the scheme, which he hoped could be completed by the middle of 2010.
However, he accepted many people believed progress had been painfully slow:
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