Budget hotel chain Travelodge has been given the go ahead to open its first hotel in St Annes.
Fylde councillors have approved an application to convert offices above Marks and Spencer on Clifton Drive South in the Lancashire resort.
Some hoteliers lobbied against the plan, claiming competition from the chain could close some hotels.
But 24 local shops and cafes backed the new hotel, which they believe will bring new business to the town.
Paul Rollings, president of the Hotels Association of Lytham St Annes, said his members feared the decision would affect their livelihoods.
"We've already had one member go bankrupt this year," he said.
Mr Rollings added: "We are not against competition when you are busy, but some of the smaller establishments are struggling".
But restaurateur Keith Blackburn said: "Travelodge is a national chain with national advertising for St Annes.
"That's a big free advert for St Annes and if the hoteliers get the overspill from Travelodge they can build those links with them and there's an offering for them as well."