Judge Jon Jackson, in a decision released to media yesterday, ruled the hotel development could proceed after developers Dan and Kelly McEwan - of Pounamu Hotel Nominee Ltd - agreed to reduce the height of the building by 1.6m and the number of hotel rooms by 22.
The concessions were made following a round of court-assisted mediation between the developers and concerned neighbours, who feared the impact the hotel would have on their views, and shading during winter.
Judge Jackson's ruling, which overturned an earlier Queenstown Lakes District Council decision last year to decline resource consent, meant the hotel could proceed with 103 hotel rooms.
However, Dan McEwan yesterday told the Otago Daily Times plans to expand the complex were already being finalised, with designs for a second wing of 43 hotel rooms already complete.
The wing, to be located behind the main hotel complex, would bring the total number of hotel
rooms to 146 if granted resource consent.
He said the frustrating resource consent process had resulted in a "heavily modified'' Hilton Hotel complex, which he doubted would be economically viable without the addition of the second wing.
"A hotel only really becomes viable at 125 rooms and optimal at 175 rooms when it starts to operate well.
"We have got to make the numbers up,'' he said.
He believed the additional wing would not strike hurdles in the resource consent process.
Construction of the main hotel complex - on an undulating site at 94-130 Frankton Rd - was expected to begin by Christmas and be completed in time for the Rugby World Cup in 2011, he said.
Pounamu Hotel Nominee Ltd is an offshoot of the Auckland-based McEwan Group, which is also planning to develop a Hilton Hotel in Dunedin's former chief post office building.
Mr McEwan said his company's Queenstown Hilton had become a tortuous process since its inception with purchase of the land in September 2001.
He had watched other five-star hotel developments - such as those planned at Kawarau Falls Station - proceed while his own dragged slowly through the design and resource consent process, only to be declined, before being approved on appeal.
The proposal had attracted 106 submissions, including 63 in support, 41 in opposition, one in partial support and one providing comment.
Independent commissioners Collins and Macleod ruled the application had failed on "technical grounds'' as a non-complying activity that would negatively impact on neighbours through shading, loss of views and a visual dominance over the surrounding area.
"I was going to pull the pin on it late last year. It just got too hard,'' Mr McEwan said yesterday.
"[But] we had done so much work the good old Kiwi spirit comes out and we didn't give in. We kept on fighting.''
Despite the delays and growing competition in the five-star market, Mr McEwan was confident the Hilton brand's international recognition - and the development's proximity to downtown Queenstown - would now ensure the venture was successful.
'The town certainly needs more high-level accommodation. It's got too much apartment accommodation,'' he said.
"The proof will be in the pudding, when it's finished and it's competing against everything else.''
