In their decision regarding the future of the Thomas Hamilton-designed building, which has been left empty for 50 years, government reporters said the proposals would have had adverse effects on the historic environment.

Duddingston House Properties and Urbanist Hotels had appealed against the City of Edinburgh Council’s decision in August 2017 to refuse planning permission and listed building consent for revised proposals to bring a Rosewood hotel to the site.

Hoskins Architects then scaled back the project after an initial bid was rejected by a single vote in December 2015 when councillors decided the original plans, which included two six-storey extensions, would damage the building’s Calton Hill setting.

The revised project proposed 127 rooms, 20 fewer than originally envisaged.

However, councillors accepted the recommendation of local authority planning officials to refuse permission for the new design amid concerns it would harm the historic nature of the site and the landscape of the city.

The city planners’ conclusion was that “the benefits to the city’s economy and to tourism by bringing an at-risk building into a suitable long term sustainable use are not outweighed when taking into account the impacts on the listed building the conservation areas, the World Heritage Site and the protected landscape”.

Launching the appeal against the council decision, David Orr, chairman of Urbanist Hotels, said the developers were committed to delivering an “outstanding” scheme for the former school, reviving a building which he claimed had been allowed to slip into a state of disrepair and neglect.

The six-week public inquiry, led by planning reporters Scott Ferrie and Dannie Onn, was held at Tynecastle Park stadium, starting in September 2018.

Long-time objectors to the development, the Cockburn Association said it was delighted with the decision.

Responding to the announcement via Twitter, the heritage body said: “The Old Royal High School is one of the world’s most significant examples of Greek Revival neo-classical buildings in the world, and it is the symbolic manifestation of the Edinburgh’s moniker ‘The Athens of the North’. Not only would the scheme caused irreparable damage to the fabric and setting of this Category A listed building, its economic value to the city’s economy was significantly less than had been said.

“Together with our Coalition partners Edinburgh World Heritage and the New Town & Broughton Community Council, we thank the very many people who contributed to our campaign against these proposals and who donated funds towards our appeal costs. We hope that the development interests behind the hotel scheme step back from their lease, which they hold until 2022, to allow the Music School proposals by the Royal High School Preservation Trust to advance.”

A spokesperson for Historic Environment Scotland added: “We welcome the decision by Scottish Ministers to dismiss the appeal against the City of Edinburgh Council’s refusal of planning permission and listed building consent for two sets of proposals for the former Royal High School in Edinburgh.

“HES objected to the hotel proposals as we considered they were significantly detrimental to the special interest and setting of the former Royal High school, an A listed building and internationally important example of the Greek Revival style. HES also considered the proposals would have had an adverse impact on the Outstanding Universal Value of the World Heritage Site.

“In addition, HES also considered that options existed for the sustainable reuse of the building which better protected its special historic and architectural interest.

“We are currently looking over the decision in detail, but note that Ministers have agreed with HES that the proposed developments would have resulted in considerable damage to the setting of one of the most important neo-classical buildings in the city, and would have caused harm to the qualities which justified the inscription of the World Heritage Site.

“We remain committed to working with partners through the planning process to ensure that a positive and sustainable use can be found for this important and impressive building.”

A rival vision by Richard Murphy Architects and Simpson & Brown to turn the property into a music school has been approved but cannot proceed until an agreement between the council and Urbanist Group expires, which is understood to be at some point in 2022.