A Premier Inn in central Bristol could be demolished and replaced with two new buildings if developers get their way.
Whitbread, which owns the hotel chain, hopes to build a 28-storey tower – the city's highest-ever – as student accommodation, plus an 18-storey "co-living" building with 136 bedrooms.
It said it would cost too much to bring the hotel "up to current Premier Inn brand standards".
But a critic said the plans would set a precedent for more high-rise buildings.
Whitbread said it had made the decision to sell the Bearpit site because the current 1972 building "is at the end of its life".
On its website, the company said the proposals would open up the area and reveal the Grade I-listed St James' Priory currently obscured by the hotel.
It said that it would be a "low or zero" car parking scheme and 20% of the co-living homes would be affordable.
Draft designs have yet to be published, but Whitbread said they would feature a new ground floor cafe opening on to the bus and coach station opposite and the roundabout.
Nearby pedestrian routes would be "made safer and attractive", it added.
Bristol's mayor Marvin Rees welcomed the proposals, saying: "The centre should be somewhere Bristol can be proud of and safe in.
"We cleaned up the Bearpit and welcome the prospect of the end-of-life Premier Inn site being transformed into hundreds of new homes, and St James' Park (and) Bus Station being opened up."
Matthew Montagu-Pollock, of the Bristol Campaign Against Tower Blocks, told BBC West densely packed, tall buildings in city centres caused problems with light and did not necessarily create more homes.
"Studies have found that you can just has many people and build just as densely if you build mid-rise buildings," he said.
Architecture journalist Joey Gardiner said if Bristol was going to have high rises, the Bearpit would be a good location.
"You have transport links, you don't have lots of heritage buildings and, let's face, it you don't have lots of beautiful architecture around it," he said.
"I can't imagine this is a building that is going to be lamented by that many people."
Richard Pearson, development manager for Whitbread, said the company was continuing to invest in Bristol, but the building "does not provide the high brand standards our customers expect of us".
He said: "Redeveloping the site presents an opportunity to realise the true potential of the gateway location for the city, whilst generating funds to reinvest in our network modern and energy-efficient hotels in Bristol and elsewhere.
"The sale is part of our strategy of ensuring our hotel offer is of the highest quality and in the very best locations for our customers."
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