Planning officers at Fife Council have turned down proposals for a £7m extension of the Rusacks hotel in St Andrews.
Macdonald Hotels, which owns the property, has appealed against the decision, claiming that the planning committee should have given more regard to the "very significant" contribution to the local economy an extra 43 bedrooms and a restaurant would make.
The hotel group claimed that the extension would create 18 jobs during construction and another eight in the hotel, as well as safeguarding the hotel's existing 47.5 full-time posts and support 128.5 full-time jobs in the supply chain, according to thecourier.co.uk.
A submission to the Scottish Government's Directorate for Planning and Environmental Appeals (DPEA) from its legal agent Burness Paull said: "There is a pressing need for new hotel rooms in St Andrews in the three- and four-star range.
"The appeal proposal will contribute a large proportion of this unmet need and will help to attract more visitors to St Andrews.
"This development will also boost the economy of St Andrews and Fife significantly by creating new jobs and safeguarding existing jobs.
"The council has failed to weigh the economic benefits of the appeal against what it perceives as the detrimental impacts of the proposal on neighbouring amenity and the historic environment."
However planning officers refused permission for the six-storey building, which overlooks the 18th green on St Andrews' Old Course, in the interests of protecting the character and appearance of the conservation area and a listed building, residential amenity and road and pedestrian safety.
The committee also said that the extension would be unacceptable in scale, density and design.
A decision on Macdonald Hotels' appeal is due on 24 July.