Set to be built on the old Alfred Harrap and Sons warehouse site on the corner of Tamar and Cimitiere Street, a 12-storey 43-metre high five-star hotel with 230 rooms will be the centrepiece of the complex.

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The Clarion Hotel on the corner of William and Tamar Streets is set to be transformed into a 55-room boutique hotel and a laneway and plaza will connect the two hotels.

A spokesman for the developer, Global Premium Hotels, welcomed the council's decision and said about 170 jobs would be created during construction and a further 300 when the hotel opened.

"This will be a hotel that not only all of Launceston, but all of Tasmania, can be proud of," the spokesman said.

"It comes at a time when some economic good news is needed. We think this is the sort of good news that Tasmania has been waiting for."

All councillors except Tim Walker voted in favour of the hotel complex at a council meeting on Thursday.

Councillor Walker feared approval of the high-rise hotel would set a dangerous precedent.

"This building is too high for our present planning scheme and what's worse could well be used to justify an even taller building in Launceston in the future," Cr Walker said.

"This proposal will dwarf the current streetscape, including the soon to be completed Verge Hotel."

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Cr Alan Harris encouraged people opposed to the hotel complex to "take a good hard look" at themselves.

"It is not a skyscraper and we are not in danger of becoming the next Sydney or Manhattan or Hobart," Cr Harris said.

Existing motels in Launceston would be impacted by the establishment of the hotel complex, but the city needed to support the jobs of construction workers, Cr Paul Spencer said.

"I'll be supporting it for the tradies of Launceston and Tasmania," Cr Spencer said.

In a time of uncertainty and economic downturn, the hotel complex development offered hope for the future, Cr Karina Stojansek told her fellow councillors.

"I believe the developers have listened to the people and have come up with a design that is sensitive for the area," Cr Stojansek said.

"I'm excited about the opportunities this development will provide for the people of Launceston."

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Cr Rob Soward admitted the council could not make decisions that pleased everyone.

"If our prime focus as a planning authority was to approve things that everybody liked we would never approve anything because people have different views," Cr Soward suggested.

"What one person finds attractive someone else might not particularly like."

Mayor Albert van Zetten was the only councillor who chose not to speak about the hotel complex, but he voted in support of it.

The state government applauded the council's decision and State Growth Minister Michael Ferguson said the hotel complex development represented a vote confidence in the future of Tasmania.

"We have a challenging road ahead as we recover from the enormous economic strain the COVID-19 crisis has created, so it is especially encouraging to see vital projects like this one moving forward," Mr Ferguson said.

Launceston Heritage Not High-rise spokesman Jim Collier said the group was "extremely disappointed" by the council's conduct.

"I and others had hoped Launceston City Council would have learnt something from the Gorge Hotel but it seems they haven't," Mr Collier said.

"Unfortunately the only way to stop this now is to go through the appeals process, I'm not saying Launceston Heritage Not High-rise will be making an appeal...we are in communication with other interested parties."

Mr Collier said "the building height is not compatible with the streetscape and character of the surrounding area".

"We're not opposed to hotel development, we just feel that this particular development is not appropriate for the area.

Property Council chief executive Brian Wightman said he looked forward to the hotel complex being built without delay.

"With the City of Launceston sitting a statutory planning authority the 11-1 majority vote strongly validates the consultation and design process the proponent has undertaken," Mr Wightman said.

"The project clearly meets the objectives of the council's long term strategic plan and it was evident that a exhaustive process of negotiation had occurred between the proponent and the planning department.