Plans for an 83-bedroom town centre hotel have been withdrawn, following objections.
The application was for a Travelodge in Shrewsbury but it was opposed by other hoteliers, residents and the civic society.
Travelodge said the town centre was short of hotel rooms. It was supported by Visit Shropshire which said demand for hotel rooms was "huge".
Developer Morris Property said it would look at the building design again.
Archaeologists also raised concerns about the impact of the building on the character of the town.
Mark Hooper of Visit Shropshire said the county had seen hotel occupancy rise by more than 200% in 2021, compared to pre-pandemic levels – the second biggest rise in the country, behind Wiltshire.
The new Travelodge was proposed for the car park between Rowley's House and the Claremont Baptist Church.
But Mike Matthews, who runs the Grade II-listed Prince Rupert Hotel, said the town did not need "another budget hotel".
He said it could put other hotels under pressure to reduce prices and lead to a "real potential of a major hotel having to close up and boarding going up at the windows".
In a statement, Morris Property said: "Taking on board comments from the Civic Society and others we are working closely with the planning department on the aesthetics of the design with the intention of potentially resubmitting an application that will attract full support."
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