A review of top end accommodation in Blackpool says significant investment in a new Central Leisure Quarter could boost demand for better quality accommodation.
An independent survey carried out on behalf of the council examined potential future capacity for three, four and five star hotels.
It found while provision of budget and mid-range holiday accommodation in the resort was good, there were gaps at the top end of the market.
This includes the need for "a small or boutique independent high quality offer" which the report said may have appeal "particularly if linked with a high quality attraction or food offer."
It also backed the growth of branded hotels, saying this would "help to support business and leisure tourism, thus attracting further visitors and investment into the area."
The review, part of the Blackpool Retail, Leisure and Hotel Study carried out by Manchester-based consultants WYG Environment Planning Transport Ltd, found Blackpool has 20 three and four star hotels offering 2,625 rooms, including 487 at the Norbreck Castle.
There are no five star hotels, although the former Sands venue on Central Promenade is currently being developed into a five star hotel.
Those which responded to the survey had an average mid-week occupancy rate of 69 per cent, with Fridays at 90 per cent, Saturdays at 98 per cent and Sunday at 63 per cent, with most people staying for one night.
The study concluded future demand for additional rooms would depend on investment in the tourism sector, particularly the Central Leisure Quarter on the Central Station site currently used mainly as a car park.
The council is currently in negotiations with an un-named international developer to bring a substantial leisure attraction to the site.
The study said: "We do consider there to be the opportunity to substantially increase the level of tourists attracted to Blackpool town centre through the delivery of the Leisure Quarter.
"While some of these visitors' stays will be absorbed by existing capacity in some of the larger hotels (and other visitor accommodation), we do consider the delivery of a substantial scheme of this nature could increase the requirement for additional hotel rooms.
"We envisage this would be in the longer term and as such, consider the existing and proposed supply of hotel rooms to sufficiently cover the potential growth over the plan period."
The findings will be incorporated into the town's local plan, setting out a development framework up until 2027.