The Resource Management and Planning Appeal Tribunal handed down its decision on Wednesday, effectively backing the City of Launceston's initial decision to approve the five-star hotel.

The hotel - under Singaporean company Global Premium Hotels' "Fragrance" brand - incorporates the Alfred Harrap warehouse and Clarion Hotel on Tamar Street, with construction to occur above the precinct on top of a "podium structure".

A total of 230 hotel rooms will be added in the 12-storey development.

The appeal from Jim Collier, of Launceston Heritage not Highrise, centred on three grounds - the height not being compatible with the surrounding area, the land not being suitable for this use due to contamination, and no evidence that excavation would not cause environmental or health impacts.

The surrounding area was deemed to be the area where the hotel "is able to be viewed in the context of those streets", such as the Boag's precinct to the north, the Tamar Street area and Cimitiere Street, including the new Verge Hotel.

While about 20 metres taller than the Verge, RMPAT considered Fragrance to be "consistent with the frontage height of the adjoining and adjacent buildings".

"But unlike the Verge Hotel, there is a considerable setback from the street frontage which reduces the impact on the apparent height of the proposal from Tamar, Cimitiere and William Street," the decision reads.

"The height differential identified is not, in the Tribunal's view, sufficient to find the proposal to be incompatible with the streetscape and character of the surrounding area."

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RMPAT also found that the siting of the taller parts of the hotel would reduce "the apparent bulk" of the structure so it could have a "harmonious co-existence" with nearby buildings.

"When viewed on the street, in the three dimensional space of the street, the heritage streetscape remains prominent and its character undiminished," the decision reads.

No site assessment had been carried out prior to the City of Launceston approving the hotel.

RMPAT found that, before granting final approval, a site sampling plan, a construction environmental management plan and a remediation and protection plan need to be confirmed.

Both parties then have seven days to make submissions.

Mr Collier said the outcome was "extremely disappointing" and there would not be an appeal to the Supreme Court.

"But we have to accept the decision, we look forward to their final determination before making a further comment," he said.

"We don't have the necessary funding to take it to the Supreme Court even if we wanted to. We are a purely people-funded group, we don't have big pockets like the developers do."

Launceston mayor Albert van Zetten said the council welcomed the decision.

"I would like to acknowledge the significant body of work undertaken by our planning officers during this process, which only highlights the council's exemplary planning practices," he said.

"We now look forward to the proponents progressing this development and the ongoing benefits to our local tourism sector and broader community."

The conditional approval came at the end of a four-year process for the developer, which abandoned initial plans in 2016, before submitting a new proposal in September last year.

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