North Kesteven District Council has approved plans for a 34 bed hotel and restaurant in Sleaford.
The authority has given the go-ahead for the proposal which will see the hotel built on Pride Parkway, within the Sleaford Enterprise Park.
An outline application by Melbourne Holdings was previously approved by the council in 2015 with plans for 21 bedrooms.
The applicant said that the restaurant would serve visitors to the hotel but would also be open to general customers.
They added that areas of the site could also be used should the development wish to expand to 40 beds.
Developers said that the hotel would meet needs of tourism and business for the area.
It may also serve patients and staff at a new, privately-run hospital clinic development project proposed for a neighbouring plot, providing procedures for NHS patients to help speed up waiting times.
Melbourne Holdings added: “The ongoing success of Sleaford is clearly generating a need for hotel spaces, a need that will only grow over time in order to support the wider growth of the economy and population of the town.
“The new hotel will have an opportunity to provide for the needs of business and tourism visitors and users”
The application comes as it was revealed in February that the council bought 37 acres of land on Sleaford Enterprise Park in order to drive growth in the area.
Securing the land would represent an investment of more than £5 million in much needed leasehold and freehold provision, the council said.
The authority added that details of what businesses are suitable for the site are not yet available and said that it may be that businesses are not operating on the site until 2021.