With Kelowna's mayor saying he feels the developer of two hotel buildings proposed for a large site at the corner of Highway 97 and Highway 33 could do more, city council has refused to award a development permit for the project.

But according to the architect of the project, council's move has not necessarily killed the plan to replace the existing Okanagan Seasons Resort with the two Marriott-branded hotels.

"We're very disappointed and it's unfortunate the project was not approved," said project spokesman Garry Tomporowski of GTA Architecture Ltd. "We'll sit back and look at the alternatives."

The reason council balked at approving the project, and sided with its planning staff which recommended rejection of the development permit application, was because the plan called for the two six-storey hotels to be located at the back of the property, leaving a large landscaped parking lot in front.

The city wanted to see the buildings along the road frontage with parking in the rear.

But the private developer building the hotels, and Marriott, argued noise would be an issue for people staying at the hotel if the buildings were not set back on the property.

The intersection, described as the busiest in the city, is one the city wants to see developed in a similar way to other Highway 97 frontage lots closer to downtown where buildings are pushed out to the roadside.

"Visually, it looks a lot better," said Mayor Colin Basran, who admitted he had a hard time with his decision but repeatedly said he felt the developers "could do better" with such an important site in the city.

He said his comments should not be construed as him saying the city is not open for business.

"But I think the community expects a little more," he said.

Voting on an alternate motion which would have supported the proposed layout of the site, only Councillors Brad Sieben and Gail Given voted to support it. Basran and Councillors Charlie Hodge, Mohini Singh, Tracy Gray and Ryan Donn voted against.

In his presentation to council, Tomporowski said making the developer place the buildings along the roadsides of the property would make the project not financially viable and Marriott was adamant in its requirement that they be located farther back because of the noise impact on some of the rooms in the two planned buildings.

The two hotels were not slated to be built with noise-reducing concrete, but rather one was to be wood-framed and the other steel. One hotel was to have 85 rooms and the other 115 rooms.

Basran's comments appeared to sway some of his councillors, who said they were also torn on the issue of approval of a development permit for the project.

Tomporowski said while the project is likely not dead, the developer will now have to go back and re-evaluate the alternatives.

Under city rules, the developer cannot come back with an identical proposal for at least six months.