They have asked for “fair consideration” to be given to a scaled-back scheme to breathe new life into the former Royal School on Calton Hill and admitted previous proposals were “too ambitious.”
The developers have pledged to scale back a “west wing” extension weeks before councillors are due to decide whether to pull the plug on a contract for the hotel project following the rejection of previous plans by the Scottish Government in October.
Developers Urbanist Hotels and Duddingston House Properties have been urged to walk away after ministers said their plans “would result in considerable damage to the setting of one of the most important neoclassical buildings in the city.”
In an open letter to councillors, Urbanist Hotels director David Orr revealed that Rosewood, the planned operator of a 125-room “six star” hotel, has pulled out.
But Mr Orr has have told the council a “five-star boutique arts hotel” can still be delivered on the site.
It is understood plans for a 75-room hotel will be brought forward if a reprieve is granted.
Mr Orr claims a rival scheme, which would create a new home for a specialist music school, will involve “far more radical intervention” in the building.
A key part of his case to councillors is that the public inquiry report which recommended refusal of the hotel plans admitted that they would have better preserve the existing building than the music school venture.
The report stated that the rival project, which the Dunard Trust charity has pledged to bankroll, would involve “extensive new building, major excavation and radical intervention into the existing fabric.”
However the inquiry report also found that the impact of the proposed wings on the building would be “so great that the setting of the listed building would be dramatically and irreparably harmed.”
The A-listed neoclassical landmark has been lying largely empty since the school relocated in 1968. It was previously proposed as a home for the Scottish Parliament and a new national photograpy centre, before the council launched a competition seeking proposals for a hotel redevelopment in 2009.
Mr Orr’s open letter states: “Very soon the council will make a critical decision about one of the city’s most important buildings.
"We would appeal to councillors to take this decision fairly based on the facts and evidence.
"Urbanist Hotels has to accept that the opportunity to bring a new Rosewood Hotel to the site has now been lost, and judging from the Reporter’s decision, was too ambitious in the scale of development on its west wing.
"However, that ambition was shared by the council, which sought at a minimum a 120-bedroom hotel.
“From the start, we’ve sought to faithfully implement the legal agreement that saw the potential for restoring a building that’s had no proper use in more than 50 years.
“Any decision will not be easy, but we believe it should be shaped with the preservation of the building to the fore. All we ask is for fair consideration of proposals that can restore another of Edinburgh’s great buildings.”
William Gray Muir, chair of the Royal High School Preservation Trust, which is pursuing an alternative scheme on behalf at St Mary’s Music School, said: "I think many people will, like us, feel frustrated that the developers continue to choose to ignore the overwhelming support for the music school.
"They’ve wasted £5 million promoting their failed hotel scheme, but not a penny of this has gone on the building. No wonder they’re desperate to keep some kind of hold on the site to try and recover this wasted investment.
“It’s their failure to deliver on their promises which has led to the building being held hostage to increasing decay for over 10 years.
"This latest desperate attempt to maintain a hold on a building against a backdrop of years of failure would be laughable if It wasn't so depressingly predictable.”