YAMBA Surf Motel is scheduled for a $2.8 million rebuild featuring 12 new rooms, a cafe and luxury rooftop pool.
Co-owner David Mayne said if the development application was approved, he hoped to start demolition next winter.
"We want a new building because the site just begs for it," Mr Mayne said.
"It's got views of Main Beach and the coastline, the breakwalls and is really in a perfect location."
A name change is also on the cards, but its new moniker is yet to be decided.
Mr Mayne said the new "ultra-modern and coastal" accommodation facility would increase local business.
"We're absolutely convinced we will boost business in town, because we're just looking to bring a modern place to Yamba," he said.
"And we're having a rooftop pool with a lift going up, which is a bit fancy, and a cafe out the front."
Demolition of the current nine-room motel and construction of the three-storey - plus a rooftop terrace - 12-room hotel at 2 Queen St is expected to happen in about six to nine months time.
"Hopefully we can get it done in winter 2015," Mr Mayne said.
The development application will go before Clarence Valley Council.
Mr Mayne and his business partners bought Yamba Surf Motel in September 2010. They also own Buckly Homestead near Camooweal in the NT.