Perth City Hall, where Margaret Thatcher gave her first public speech as Prime Minister, has been under threat of demolition since 2005.
In December, bosses at Perth and Kinross Council voted to demolish the hall and give the city a European-style central square.
Their £4 million plans met opposition from all over the country, with Prince Charles giving his support for saving the Edwardian building.
However, it was confirmed yesterday that councillors will be urged to award planning permission to a scheme that would see the City Hall turned into a five-star hotel.
A report to go before the development management committee on Wednesday states that the hotel will "improve the vitality and viability of the city centre" and "potentially lead to further economic investment".
If approved, the hotel plan will then exist in the same grey area as the proposals to demolish the hall and create a civic square.
Planning permission has already been granted, but the proposals require listed building consent from Historic Scotland to move forwards - a consent that appears increasingly unlikely now that council planners have accepted that the hotel scheme is commercially viable.