The five-star Malmaison, in Leith, is on the market for 15 million, alongside a sister hotel in St Andrews.
Owners MWB Group Holding said that the location, while good for leisure, was "not ideal" for business travellers. Robert Cook, the head of hotel operations, said the firm was looking at two locations for a larger hotel in the city centre.
The 100-room hotel, bar and restaurant was the first Malmaison when it opened in 1994. The group also owns the Hotel du Vin chain, which has a hotel in Bristo Place.
Mr Cook said: "Malmaison needs to offer its loyal fan base the latest in cutting edge design and hospitality to maintain its position as the UK's leading design-led boutique hotel group. We are already looking at properties to create a larger hotel that meets the new design criteria."