The proposed three-storey development would include 70 rooms with some pet-friendly, a private lounge, a restaurant and bar, gym and a function space big enough for 120 people.

The hotel is slated for the eastern entrance to Gunnedah, via the Oxley and Kamilaroi highways, at 415-419 Conadilly Street which has historically been used as a fuel depot.

The developer, Gunnedah Gateway Holdings, wrote in a submission to the council that the proposed hotel was consistent with the council's strategic goal to "create gateway development on the approaches to Gunnedah".

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It is believed the hotel would be a driving force to help create a "strong and dynamic regional economy" with the hotel expected to inject $10 million into the town.

"The proposed development will provide additional employment opportunities in Gunnedah, provide additional tourism opportunities and further strengthen the Gunnedah economy," the developer wrote.

"The introduction of a new business in town will strengthen community resilience and market dependence of some industries in town including the coal industry."

The bar and restaurant included in the hotel will cater for both fine dining and casual meals with seating for up to 150 guests.

The developer said this would give locals another option and reduce travel to neighbouring cities.

"In many cases locals currently travel to Tamworth or surrounding areas for fine dining experiences and having businesses of this nature can help attract new residents to town," they said.

The surrounds of the hotel will include extensive landscaped grounds with a focus on the inclusion of koala habitat trees and water ponds.

"The site is well positioned to create a landmark development inviting visitors to Gunnedah and setting a tone of contemporary architectural design for passing traffic," the developer wrote.

"It can also attract more people to reside in the town and increases in population allows public authorities to deliver a higher level of service to its residence."

The council, apart from mayor Jamie Chaffey who is a shareholder in the development, unanimously voted to amend the Gunnedah Local Environmental Plan 2012, allowing the development to progress to the next phase of planning.

With the Conadilly Street site is classified as 'low residential zoning' the amendments to the plan allow for the development of hotels and motels.

Council also approved the removal of floor space ratios to allow for greater design flexibility.

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