Plans for a three-to-five storey hotel that would connect directly with Blackpool's new conference centre have been approved.
The scheme for land between Leopold Grove, Adelaide Street and Alfred Street includes a second floor bridge to link the development directly with the £25m conference centre under construction at the Winter Gardens.
Blackpool Council's planning committee has agreed an outline application paving the way for detailed plans to be submitted.
The land is currently being used as a car park.
But there were objections from representatives of hoteliers in the area.
Ian White, a director of StayBlackpool, said the scheme was "a real concern for the neighbouring hoteliers" and warned some businesses could close down.
He said: "Adding 203 rooms for the conference centre at these lower standards, will potentially see 20 10-room independents fail, with the loss of 40 Blackpool ambassadors who actively promote the town so the guests leave happy with the confidence to return."
The plans, submitted by London-based architects Bisset Adams, had been revised in order to reduce the scale of the building so it fits in better with the surrounding area, enabling a maximum of 203 bedrooms to be provided.
A report by planning officers said the revised scheme will “add to the offer of quality visitor accommodation close to the town centre and is particularly well placed to serve future delegates at the conference centre”.
The hotel - which is expected to be three and four star - would include ground floor leisure facilities including a health spa, cafe, bar and restaurant and parking for 62 vehicles, accessed from Adelaide Street.