Conservation campaigners are jubilant after Scottish ministers rejected plans to convert one of Edinburgh’s most famous neoclassical buildings, the Old Royal High School, into a luxury hotel. The Scottish government said proposals by Urbanist Hotels and Rosewood Hotels to build a “six-star” hotel by adding two prominent wings to the listed 200-year-old Georgian building, which sits on the flank of Calton Hill, would have ruined an essential part of Edinburgh’s world heritage site. In a decision expected to end one of the UK’s most rancorous conservation disputes, the government said the hotel “would result in considerable damage to the setting of one of the most important neoclassical buildings in the city”. Its ruling noted Unesco’s world heritage site citation for Edinburgh, which said the Old Royal High School and the surrounding landscape of Calton Hill “provided a clarity of urban structure unrivalled in Europe” that was of “exceptional” historical and architectural interest. Christina Sinclair, the director of Edinburgh World Heritage, welcomed the decision. “This was always a highly insensitive commercial development which would have been deeply damaging to an internationally recognised masterpiece of Greek revival architecture, as well as to the designed landscape setting of Calton Hill,” she said. The ruling clears the way for the building to be converted into a new music school proposed by a rival bid backed by the Royal High School Preservation Trust run by St Mary’s music school, based in the west end of the city. William Gray Muir, the preservation trust’s chairman, said: “Scottish ministers should be congratulated on this considered and sensible decision. Their recognition of the importance of the building reinforces our belief that it is the perfect place for Scotland’s national music school. Doing so will bring together two of Scotland’s national treasures.” The music school proposal, funded by the Dunard Trust, will need to apply for fresh listed building consent. It still has planning permission from Edinburgh city council, which gave both rival bids planning consent in 2017. David Orr, the chairman of Urbanist Hotels, said the decision was deeply disappointing and the consortium was considering what to do next. “It is extraordinary that during a national crisis, at a time when it has never been more important to support Scottish tourism and jobs, our country has been denied a world-class hotel to put it on a level with other European capitals,” he said.