A 10-story Hotel Indigo is slated for Seven Mile Beach in Grand Cayman.
The 282-room property will have multiple restaurants, a pool deck and rooftop bar plans to open in 2024.
While it will be set back from the beach, it will have a designated beachfront area for guests.
The property is south of the Kimpton Seafire Resort & Spa; both are InterContinental Hotels brands.
"Having the globally recognized Hotel Indigo brand represented in the Cayman Islands will be a wonderful addition to our tourism product," said tourism minister Moses Kirkconnell.
"The continued development of tourism properties despite the current slowdown in tourist visitation speaks volumes about the strength of our economy," he said.