An upscale hotel will be the first major development spawned by the $290 million arena that will be the new home of the Penguins.

The team is expected to announce a deal today with Horizon Properties Group to build a 130- to 150-room hotel on Centre Avenue next to the arena.

It will mark the team's first bid to fulfill the development potential associated with the arena project, which is being built with annual contributions from the city's casino (now under construction), state development funds backed by slot machine revenues and Penguins contributions.

The team and Horizon Properties have signed a memorandum of understanding to build the seven-story hotel on a roughly one-acre parcel. The total cost of the development was unavailable yesterday.

City Contextual Design Advisory Panel members will get their first look at the plans at a meeting today. The Penguins declined comment yesterday.

The hotel will be built on the same side of the street and just east of the arena.

Cecil-based Horizon is involved in the construction of the new Dick's Sporting Goods headquarters in Findlay and also developed the Hampton Inn & Suites hotel near The Meadows. It is developer of the Southpointe II project in Washington County.

Officials hope to start construction of the hotel by the start of the new year and have it completed when the new arena opens before the start of the 2010-11 hockey season.

The hotel will be run by a national chain, but the operator has yet to be determined. Among its amenities, the hotel will feature a street-level restaurant with an outside dining patio facing one of the arena's entrances. There also will be conference space in the hotel.

Team officials had requested proposals from hotel developers early this year to gauge interest in such a project. At the time they were looking at a limited-service boutique-style hotel, but have since decided to go more upscale.

They apparently are counting on Penguin games and the team's rabid fans as well as concerts and other performances at the new arena to help fill the hotel.

The hotel will compete with several in the area, including the 402-room Marriott Pittsburgh City Center, which bills itself as the official hotel of the Penguins.

Before the arena opens, the Penguins also will try to find tenants for ground-level retail space along one side of the building on Fifth Avenue.