Work on the 180-room waterfront site will begin in October, a year after the plans were originally submitted.
Aimed at both business and leisure travellers, each suite will feature a kitchen and living room that can be transformed depending on the guests' needs.
The hotel will be the second site for the Urban Villa concept, which debuted in West London in January.
Union Hanover managing director Eric Jafari said: “This hotel is a benchmark asset for us. Coupled with its myriad of excellent universities Edinburgh lends itself to our millennial appeal of our concept. We anticipate that this hotel will be the Urban Villa that defines the brand and sets the standard for all future sites.”
A 182-room Urban Villa Aberdeen is also in the pipeline as part of the firms’ plans to grow its hotel portfolio to £1bn.