An Ottawa developer is a step closer to building a luxury boutique hotel in the ByWard Market, but some Lowertown residents say they're not pleased with plans to tear down an old building to do it.

The Union du Canada building has stood at the corner of Dalhousie and York since the 1960s. It housed the headquarters of a mutual aid company founded by local francophones, which went bankrupt last year.

Claridge Homes bought the property. It's better known for building condos, but the company sees an opportunity to fill a hotel-room shortage as the city is attracting more big sporting events and conventions, according to vice-president Neil Malhotra.

Neil Malhotra, vice-president of Claridge Homes, says Ottawa needs a new, boutique hotel in the ByWard Market. (CBC)

"You know they don't actually have enough rooms to fill the convention centre for a lot of large events they could handle. So that's the first thing that sort of piqued our interest," Malhotra said.

"There's an identified need in the city for … a nice, new, shiny hotel downtown. There hasn't been a newly built hotel in Ottawa since the Westin. We just identified an opportunity, and the ByWard Market is a unique location. If you're ever going to do a boutique hotel, it's the only neighbourhood in Ottawa that you would ever do something like that."

Plan to tear down building approved by planning committee

Claridge's original plan to reclad the building and add extra storeys angered the community, so instead Claridge said it would build shorter if it could tear it down and start from scratch.

The city's planning committee approved that plan Tuesday. It goes before city council Wednesday.

But Liz MacKenzie of the Lowertown Community Association said she'll be sad to see the old building go.

Liz MacKenzie of the Lowertown Community Association says she appreciates the design of the Union du Canada building. (CBC)

"As you can see, the windows are all on different angles," she said. "There are four different patterns of windows and they're all meant to reflect the light in different ways. If you see this building at sunset, the whole thing is gold all the way up. It reflects the sunset."

MacKenzie said she appreciates the building's design and fought to save it. Now, she said she hopes Claridge's new hotel won't look too modern for the ByWard Market.

"The best I can hope is that they stay at a lower height, and that we have a design that — at least along the street — is compatible with the heritage buildings on Dalhousie above this block … and below this block."

The hotel, if approved, could open under an international brand in less than two years, Malhotra said, in time for the women's world cup of soccer.