City councillors have approved plans by the narrowest of margins for Scotland’s first five-star ‘floating hotel’ to be berthed in the historic Port of Leith.

Politicians voted by six to five to allow plans for MV Fingal – a former lighthouse steam tender – to be converted into a luxury £3.5m upmarket hotel with 23 exclusive bedrooms.

The ship – which is due to open in Spring 2018, creating 30 jobs – was described by owners The Royal Yacht Britannia Trust as a ‘world-class addition to the Scottish tourism landscape’.

The plans were passed this week despite concerns about the impact of noise from events onboard the vessel following objections received from 14 local residents.

However Cllr Lewis Ritchie (SNP), convener of the planning committee, said: “What we have here is an innovative and bold proposal that would add to the richness of life in that area. Some of the concerns that we’ve got could be bottomed out by putting the right conditions in place; I think this is a commercial venture the city should be getting behind and I think it would be extremely popular.”

Cllr Ritchie added that noise from customers at the hotel’s 80 cover restaurant and 80 person function suite – onboard the vessel moored in the Prince of Wales Docks – should not be grounds to refuse the plans.

He recognised that there would be some amenity concerns addressed within the report but that the slight negative impacts will be overriden by a “net benefit” to the area.

Cllr Joan Griffiths (Lab), who seconded the motion, added: “I think this is quite exciting, bold, and will bring vibrancy to that part of the dock.”

But Chas Booth (Greens) said: “A floating hotel in Leith is not something that I am fundamentally opposed to. I accept the principle of it. The problem with this application is the location and the impact on residential amenity. The report before us makes it absolutely clear that the noise impact cannot be ameliorated by a planning condition that we can impose. You can move a boat but you can’t move flats.”

The project is being overseen by two top hotel designers – Alan Pedley and Stephen Flanagan – who have worked across the world on multi-billion-pound hotel projects.

MV Fingal made waves last year when it was transformed from its original colours into a multi-coloured spectacle along Leith shoreline – evoking the camouflaged ‘Dazzle Ships’ of the First World War; artist Ciara Phillips had received the commission as part of the centenary commemoration for the conflict. She then painted over the stripes to its current gunmetal grey as work began on the massive renovation project, which will see the installation of a glass lift resembling ‘the top of a lighthouse’ going from the top to the bottom of the vessel. Planning permission had already been granted for the vessel to be moored at the side of the Port if plans for the current location had run aground.

A retractable glass skylight will also be installed along with video-screen panelled walls in a multi-functional space below deck which could be configured for a dinner, a conference or a media event. The rooms will be split into three categories, including a Presidential Suite, which will occupy most of the first floor and be marketed to top-end clients.

Head of Hospitality & Events, Andrew Thomson, said: “Fingal is like no other in Scotland. It is a privilege to take this historic ship and create a new, exciting and world-class addition to the Scottish tourism landscape. The craftsmanship and design, inspired by Fingal’s provenance and heritage, coupled with the best of Scotland’s larder will ensure our guests’ experience on Fingal is truly memorable.”

The Royal Yacht Britannia Trust had been searching for a vessel to complement its corporate offer for some time, given the lack of an overnight stay option for guests who attend hundreds of events on board the former royal yacht – which has been docked in Leith since being decommissioned in 1997 – every year.

Six out of the 11 councillors passed the plans subject to conditions including cycle and footways being part of the development and suitable disability access put in place.

For full background on the MV Fingal read our in-depth report here.