Reasons given for the refusal included that the site is not derelict, there was concern about the loss of another of Morecambe's hotels and concerns about the additional impact on neighbouring properties.

It was also said the developers had not demonstrated a need for the new accommodation.

Head of planning, Andrew Dobson said: "We already have Middleton Village retirement complex – we could hardly argue that the proposed development is needed.

"We already have an over-supply of new housing."

Mitchell's Brewery had applied to demolish the over 100-year-old hotel and replace it with one and two-bedroom assisted-living apartments, two nurses' studios and a parking area.

A council report had recommended refusal saying the "bulk and position of the building would have an adverse effect on the amenities of residents of Mount Gardens and Elms Drive" and there is "insufficient evidence that the development in the form proposed would meet local housing needs and offer benefits to the community."

Nine nearby residents have raised objections to the proposals, on various grounds – including that the building is too large for the site, unsatisfactory access arrangements, possible loss of light for neighbours in Mount Gardens, damage to roots of the large beech tree on site and the lack of adequate open space for the residents of the flats.

Morecambe Neighbourhood Council has also objected to the plans, saying Morecambe can't afford to lose any more hotels.

The council has received four letters supporting the development, on the grounds that the Elms is inappropriately sited, functions there cause noise and disturbance in the evening, and any new flats would ensure the future of the shops in nearby Princes Crescent.

MD of Mitchell's, Jonathan Barker said: "It's the developer that is taking the risk.

"The hotel is open for business but we can't continue to make losses.
"We will have to go back to the drawing board or give serious thought to making a revised application.

"We could also appeal against the decision."

The Visitor broke the story of the Elms' possible closure in April, when Jonathan Barker said the Bare hotel had "not been paying its way".