The St Enoch Hotel in Glasgow's Howard Street was for years used as a halfway house for the homeless and people with substance abuse problems.
But since re-opening earlier this month after a refurbishment, the hotel has been fully booked for two weekends in a row.
The St Enoch Hotel was bought by Balvicar Hotels Ltd in 2011, along with the Queen's Park Hotel in the South Side.
Also a former trouble spot, the Queen's Park Hotel was made into a mainstream hotel a year ago and has been a big success.
The owners followed a similar model for the St Enoch site.
Balvicar Hotels Ltd's operations director, Mukul Biswas, said: "We have replaced beds, furniture and carpets in all 42 of the St Enoch Hotel's rooms and cleaned and decorated the entire building.
"We are aiming it at two markets now – the people looking for a clean, affordable place to spend the night and those looking for a budget hotel room with all the usual things you would expect such as tea and coffee facilities.
"All the rooms have their own toilets and there are only a handful left which use a shared shower room. All the others have their own shower room.
"The first two weekends have seen us fully booked and during the weeks we've been busy too. The coming weekends are all fully booked too.
"While we offer budget prices, we do go the extra mile for customers. For example, we give guests a breakfast bag, even though we don't advertise the rates as including breakfast.
Neighbours of the Queen's Park Hotel have been pleased with the change and Mukul is confident the St Enoch Hotel will soon enjoy an enhanced reputation.
But the transformation of the South Side building was not without its problems.
Mukul said: "The biggest problem we had was with taxi drivers picking people up from the airport and, when hearing they were staying at the Queen's Park, telling them it was a dive and they should avoid it.
"We had to call the taxi firms and let them know about the changes and ask the drivers not to put people off like that. I'm sure we'll suffer similar issues at St Enoch, but with time we will shake off the perceptions of the past."
Double rooms at the St Enoch Hotel start from £23, with cheaper rates for shared, hostel-style rooms.