The Coventry-based company bought the 35-key Tides Reach Hotel from the Edwards family, who had owned it for 47 years.
Rigby Group chief operating officer Steve Rigby said: “We believe this will be the first boutique hotel new build in the region for some years and we are committed to growing our portfolio of investments in the South West where we see considerable opportunities and synergies with our aviation business in growing the visitor economy”.
Plans for the new 50-bed hotel include a spa, private beach and terrace, waterfront accommodation and a high-end restaurant.
Torquay-based architect Kay Elliot has been brought in to design the new hotel.
A public exhibition is being planned for the spring, with a planning application expected to be submitted by the summer.
If approved, the new hotel would be open in time for the summer 2016 season, according to the report.
Managing director Mark Chambers said Rigby Group’s ambition was to grow its boutique hotel portfolio to become the biggest in the South West.