Warwick Castle visitors will be able to stay the night in a hotel within the grounds of the historic Grade I listed building after planning permission was granted.

But the decision was far from straightforward with a number of councillors at this week's Warwick District Council planning committee meeting raising concerns and questioning what benefit the development would bring to the town.

The plans for a 60-bed hotel, extension to an existing restaurant, a play area and an elevated walkway were approved by eight votes to two following a lengthy debate that also included input from two two members of the public.

In her presentation, planning officer Lucy Hammond explained: "The intention of the hotel is to provide overnight accommodation to visitors of the castle rather than something of a more speculative nature or a destination hotel. To that end, it is not anticipated that there will be additional trips to the site as visitors will already be there at the castle.

"The design of the hotel is intended to echo the existing Knights Village structures – the timber lodges that already exist on the site."

She added that the heritage impact was considered to be less than substantial by Historic England and the council's own conservation officer.

But the plans were condemned by Dr James Mackay, of the Conservation Advisory Forum, who said: "The land on which it is proposed to build this industrial structure dressed up with cosmetic brickwork and fake 'olde worlde' windows has England's highest level of heritage protection within a Grade I registered landscape. Neither the Tower of London or Windsor Castle has greater heritage significance."

Resident Dr Veronica Hyland argued that the development would not boost the economy of Warwick – one of the reasons put forward by operators Merlin for approving the plans.

She said: "Visitors will be captives within the grounds. This is all geared to the further development of the theme park and its Disneyfication."

Nick Blofeld, Warwick Castle's divisional director, told the meeting that while the development would see the loss of 65 car parking spaces, there would still be enough to cater for visitors. He added that the hotel would create 29 permanent jobs and bring an additional spend to Warwick of between £1.9m and £2.6m each year.

But Cllr Terry Morris (Con, Warwick Saltisford) said: "Either the hotel is there to service visitors to the castle or it is there for the benefit of the town. We cannot argue it both ways. If you are staying in a hotel in the castle grounds that has an onsite restaurant you are probably going to eat there. I am yet to be convinced of the public benefit."

Miss Hammond explained there had been no proposal to increase the gate opening times of 10am to 4pm and that it was on that basis which the application had been assessed.

This prompted Cllr Oliver Jacques (Con, Warwick All Saints and Woodloes) to comment: "If those times remain then it would preclude it being anything other than an on-site hotel in my opinion."