The council ruled the developer had not provided enough evidence to back up its claim the Albert Hotel in North Queensferry was no longer viable as a business.
The plan unveiled by Edinburgh-based Festival Inns proposed turning the 19th-century C-Listed building into residential accommodation.
The company withdrew its original proposal after running into more than 100 objections, and returned with a fresh bid in December 2021 for one two-bedroomed flat and three flats with three bedrooms.
But the proposed development continued to face considerable opposition in the community.
The much-photographed Main Street property sits in the centre of North Queensferry’s conservation area, and the community argued strongly it could still have a vibrant future as a tourist attraction, despite being boarded up and closed for the past four years.
The building has declined in recent years and while structurally sound, according to a report to the committee, could be “potentially dangerous”.
The developer argued it was no longer viable to run as a hotel, and needed substantial investment.
It stated: “With the minimal income from local trade and the year-on-year decline of any significant hotel trade, the operation of the property as a hotel with bar and dining facilities is not economically viable and that any investment would be better utilised in redevelopment of the property for the residential market.”
Festival Inns’ application was to turn it into four flats with balconies offering spectacular views of the Forth Rail Bridge World Heritage Site.
But its submission was ruled inadequate by officers and councillors.
A report to the committee stated: “It is considered that insufficient evidence has been submitted that demonstrates that the use of the premises as a licensed hotel business is not viable.
“It is also considered that insufficient evidence has been submitted that demonstrates the property and business has been actively marketed for a period of 18 months at a fair market value.
“The principle of the proposed change of use is therefore not acceptable.”
Officers also told the committee there were no accounts submitted for the former operator, noting: “It was let to various tenants and its use as a hotel has ceased, but that does not evidence the fact the use as a hotel is not viable.
“There are issues around the valuation of the building. It has deteriorated in condition and the valuation is going back to full survey.
“We are not satisfied the evidence is really there that it is not viable.”
The committee refused permission for the change of use.
It also rejected a subsequent application to carry out internal and external alterations to the flats.
Mary Stewart, service manager told the committee: “The proposal would also involve external alterations which would have a detrimental impact on the character of the listed building.
“The loss of the painted signage would have considerable impact on the building.”