As part of the redevelopment, Splendid also intends to create a new 140-cover restaurant space on what is currently an outside terrace area, and upgrade its existing 107 bedrooms.
The hotel has several spaces for hosting events including the 120-capacity Grand Boardroom with views of the Minster and city wall.
Stuart Bailey, CEO of Splendid Hospitality Group, said: "This is an exciting period for The Grand and for York. The hotel is already acknowledged as being one of the finest in the region but, following this major investment, it will be among the finest in the country, attracting more visitors in search of a luxurious hotel stay from further afield."
Maria Florou, the hotel's general manager added: "The Grand Hotel & Spa has been a great success story for the City of York but now we are entering a new, even more exciting chapter. This is extremely good news for the local area as the new look hotel will have wider appeal, bringing more people to this fantastic city."
Splendid purchased the hotel, formerly known as the Cedar Court Grand Hotel & Spa, last year. It already owns York's Express by Holiday Inn and will opening the 101-bedroom Hotel Indigo in the city this summer.
• For more breaking news and in-depth features, sign up to C&IT Magazine's daily Newstracker here