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Wetherspoon wants to build a 20-room hotel costing £2.5 million above its Herne Bay pub.
Bosses say the development will create 40 new jobs at The Saxon Shore in Central Parade - and could encourage more businesses to invest in the town.
The pub chain is hoping to purchase part of Beach Street car park, behind the tavern, from Canterbury City Council in order to build a reception for the planned hotel.
A document prepared by council officers said the scheme hinged on the sale of the land.
It read: “Wetherspoon would need the additional land to create reception space and improve access to the upper floors – which are currently under-utilised – both of which are necessary for the conversion to hotel accommodation.”
The 65sqm plot was originally earmarked for two new homes to be built by the city council as part of its regeneration of the former Tivoli Arcade.
But ahead of last night's property and regeneration committee meeting, officers recommended councillors give the go-ahead to the proposed sale.
They argued the profits from the sale of the properties would be "very similar" to the sum Wetherspoon is offering to pay.
The local authority did not stipulate the price it wants to sell the land for – but said it represents the "best value to the council".
The document added: “It is possible that, if put on the open market, a different value could be achieved.
"However, that would stop the development of hotel accommodation by Wetherspoon.
"Only they would be able to develop this small area of land in such a way to deliver more than 20 new hotel rooms in the town centre.
"It is recommended to sell the land to Wetherspoon as this represents the best opportunity to enable significant investment into Herne Bay which would deliver much-needed hotel accommodation.”
"Hopefully it will also act as a catalyst for other businesses to invest in Herne Bay"
The multi-million pound Tivoli scheme is for 27 flats, as well as artists' studio spaces, a retail unit, six town houses, and 25 parking spaces.
It will continue to go-ahead, despite councillors voting to approve the sale of the land yesterday.
Council spokesman Rob Davies last month said construction will begin this summer - a year behind original expectations.
Wetherspoon spokesman Eddie Gershon said: "Subject to planning and licensing we aim to extend the pub and garden and also add a 20-room hotel to the pub.
"The overall development cost is £2.5 million and will create up to 40 new jobs at the pub.
"Hopefully it will also act as a catalyst for other businesses to invest in Herne Bay. There are no opening dates for the project."
