A new hotel is under construction in Ashland - the first under a new town program for hotel operators to raze and replace dilapidated buildings and receive a tax rebate.

The five-story Tru by Hilton hotel should open sometime in early 2020.

The 91-room hotel would be at the northwest quadrant of state Route 54 and Interstate 95.

It replaces a former Red Carpet Inn and vacant restaurant property (Phoenix Garden Buffet and KFC before that) that were demolished in March.

The Tru hotel is a new brand for Hilton. The first Tru opened in 2016 and there are 60 locations across the country, including one in Farmville.

The one in Ashland is being developed by KM Hotels, which operates hotels in seven states.

Henrico County-based KM Hotels has six properties in the Richmond area, including the renovated Red Roof Inn that is next to the Tru hotel under construction. That Red Roof Inn had been the north building of the former Red Carpet Inn.

KM Hotels got approval to participate in the incentive program, but the rebate won't go into effect until the property starts generating revenue.

Hotels covered by Ashland's Economic Development Authority incentive program need to tear down the dilapidated buildings and construct a new one.

A new hotel must have at least 85 rooms, generate $100,000 in transient occupancy taxes each year, and be in the town’s hospitality zone, which is an area west of I-95 that stretches to South Washington Highway. The town's EDA will rebate 50 percent of the transient occupancy tax collected by the hotel for the first six years, capping it at $550,000.

"The exciting part about this is that they actually demolished an old, underperforming hotel and vacant restaurant to do this," Joe Topham, Ashland's business retention and expansion manager, said about the demolition of the former Red Carpet Inn.

"This eliminated an eyesore at once, while promising even more in the future."

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