A Grade II listed seafront hotel in Brighton will be turned into a backpackers' hostel after being sold for more than £2 million.

The Palace Hotel in Grand Junction Road will reopen on Tuesday as a hostel after being bought by Buckinghamshire-based Interpub.

The top two floors of the four-storey building will be used for dormitories, containing 48 beds.

The ground-floor Charlie's Bar and The Junction Club, in the basement, will remain as they are.

The hotel was sold on behalf of Doug MacLennan and Cameron White, who started running the nightclub in 1990 and bought the whole building in 1997.

Interpub, formed in 1993, operates Belushi's Bars, American-themed bars and cafes, and St Christopher's Inns, offering low-cost hostel accommodation.

The Palace Hotel will be converted into its tenth St Christopher's Inn. But some have questioned whether the seafront site is the best place for a hostel.

Selma Montford, secretary of the Brighton Society, said: "I am not opposed to backpackers, nor to Grade II listed buildings being used for hostels. Cheap facilities for young people are a good idea.

"I just wonder whether this is the right site for a backpackers' hostel. I'm not sure being in the heart of the tourist area on the seafront is suitable. There is a hostel off West Street, which would be a more appropriate."

Simon Chaplin, of Maidstone-based surveyors Christie & Co negotiated the sale, said: "The hotel attracted strong interest from both private and corporate buyers and will become a good addition to the Brighton scene."

He would not reveal the exact figure for which the hotel was sold but said it had exceeded the asking price of £2.25 million.