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Historic India Buildings at the top of Victoria Street will be converted into a 225-room high-end hotel with multiple dining and drinking outlets, expected to open in 2020.

The hotel is also intended to host a wide range of events, including gigs by local musicians.

The announcement was hailed as “a huge coup for Edinburgh” and is forecast to boost the local economy by £5 million. Around 200 full-time jobs are expected to be created at the hotel.

Virgin opened its first hotel in Chicago in 2015, based in a historic downtown office building. Several more are under construction across the US – in San Francisco, Dallas, New Orleans, Nashville, New York and elsewhere.

But Edinburgh was chosen for the company’s first venture beyond the States.

And the company is delighted with the building it has secured, the A-listed former registry office just a few paces from the Royal Mile.

Richard Branson celebrates the grand opening of Virgin Hotels Chicago by recreating the iconic parade scene from Ferris Bueller's Day Off. Picture: GETTY

Sir Richard said: “Edinburgh is such an iconic city and we’re thrilled to be able to say it will be the home of the first Virgin Hotel in the UK and across Europe.

“My grandparents were from Edinburgh, so Scotland has always held a special place in my heart.

“The people of Edinburgh have been so great in welcoming us to their great city; we can’t wait to open our doors to people across the country and, indeed, the world.”

The Virgin Group founder said uncertainty over Brexit had not deterred him from making the investment in Edinburgh.

Wednesday 31st of January 2018: Virgin Hotels - Chicago. Virgin are to open their first hotel in Edinburgh

He said: “In times of uncertainty sometimes it’s a good thing to invest.

“Brexit will definitely have a negative effect on the UK economy but the best way to offset that is for business people to continue to invest and not freeze like a rabbit in the lights of a car.”

There was controversy when plans for a hotel at India Buildings, descending right down to the Cowgate, were first unveiled in 2014 after developers Jansons bought the property.

Objectors claimed a new-build element of the project on a gap site in the Cowgate will block light from the neighbouring Central Library.

And community councillor Simon Byrom spent a week living in a tree on the site in protest at the plans.

Virgin says it wants to involve the community in the project and showcase local music and entertainment.

Virgin Hotels CEO Raul Leal said Edinburgh had been a natural choice for their first hotel in Europe.

“It’s a top travel destination, it’s an amazing place. I spent my tenth anniversary there. It’s an ideal location.

“It’s very fitting that our first hotel in Europe is a historic landmark building like Chicago.

“The location is fabulous and we love the fact we had to work round the building.”

He said when they first looked at the building, they walked through it asking: “Can we fit our proposition in here without disrupting the building?”

He said: “It has charming little spaces, especially the beverage areas. There will be plenty of surprises and delights – little coves and places for privacy, where people can have meetings or dine.

“From a physical perspective there won’t be too many changes inside the building except for restoring what is there and then overlaying a modern, but warm and sophisticated design.”

Rooms in the hotel – described as “chambers” – are divided into a dressing room and a sleeping lounge, separated by sliding doors, in a bid to allow guests maximum privacy.

Mr Leal said: “Instead of walking into a traditional room with a small corridor, a little bathroom to the right and a closet to the left, it will feel like you’re walking into a dressing room area where you’re able to unpack, plug in your technology, then you go into the second half of the room which includes the lounge bed.

“But the real reason for the dividing doors is for service. You could be in bed ordering room service and you could say you want it delivered in the front of the chamber; the room service waiter knocks, delivers but because the doors are closed you never see service being delivered. It’s a bit of privacy, a bit of security.

“It gets rid of that awkward feeling you have when you’re standing in the door waiting for room service in your robe and you have to sign that dreadful little cheque.

“From the female perspective you don’t have to deal with someone being in your room whom you don’t want to see at that point.”

Mr Leal said around half of Virgin Hotel customers are female.

The Commons Club – the hotel’s main restaurant and bar area, also seen as a place for people to work or mingle – is a key place, and will be open to both guests and locals. Mr Leal said as well as varied food offerings there would be live music acts, depending on the day of the week, and local DJs.

The old Cowgatehead Church, which also forms part of the development, will be another space which can be used for music.

“The church component will be a tremendous area for events,” said Mr Leal. “We envision that space to be designed as a place where you can do live music events, with local musicians bringing in their following.

“It will be used for a variety of things. It will be designed in a way that respects what’s there but give it a little twist so we’re able to do perhaps a fine dining event, or a small live music concert with local bands.

“What we like about that location is there’s so much entertainment going on there, hopefully we can just add to what the area already has and fill that gap.”

He said involvement with the community was a vital part of Virgin Hotels’ plans.

“We’re not rolling out 100 Virgin hotels – there will be 25-30 around the world.

“It’s less about the brand and more about building local community.

“Our objective is for them to feel really part of what is being created,” he said.

“We will have local involvement in the project from day one and we will keep the community appraised of what is happening. It’s really about communication, making people feel part of it.”

He said music and entertainment from the local community were part of their brand proposition everywhere.

And they also wanted to showcase culinary talent and present some of the best food Edinburgh has to offer.

City council economy convener Gavin Barrie said: “This is an exciting announcement and a huge coup for Edinburgh; it really is testament to the city’s resilience during these uncertain times that Virgin Hotels has chosen Edinburgh as the first city outside the US in which to open a new hotel.

“It’s estimated that the hotel will provide a £5 million boost to the local community every year, helping one of the city’s key shopping areas in Victoria Street and the Grassmarket,

“The development of the site will help support hundreds of jobs during construction.”

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Virgin to open its first UK hotel in Edinburgh