A SCHEME to transform a city centre car park into a four-star hotel has been scrapped by developers.

Thistle Hotels gained planning permission to pull down the 255-space car park in the former Presto building on the corner of Tanner Row and George Hudson Street.

The withdrawal has sparked fears that hotel businesses are losing interest in York, as parking places are on the decline.

Thistle Hotels spokesman Jonathan Sloane said: "We are not in active discussion with anybody about this site.

"I don't know why the initial scheme was dropped, but we have had no plans for the site for quite some time."

City tourism leaders today suggested that the pull-out may have been the result of car parking problems in the city, which is worrying hotel owners.

Although planning permission has been given for a hotel, that is not binding on the applicants.

The lease for the land is owned by City of York Council, which confirmed it is speaking to other developers.

A spokesman said: "There are other parties interested, but we cannot say more than that for the moment for reasons of commercial sensitivity."

The decision to sell the car park site was made after the council faced a £1.8 million bill to revamp it, weighed against its predicted annual income of £92,000.

Councillors felt a new hotel would bring economic benefits to the area of George Hudson Street and Micklegate, and it was in line with the council's strategy to reduce car use in the city.

But it was criticised by Liberal Democrats, who claimed closing another car park was bad for the vitality of the city.

On Monday, the Evening Press revealed that more than 1,000 parking spaces were set to be lost in York after a spate of car park closures.

Gillian Cruddas, the chief executive of the York Tourism Bureau, said: "I had heard that they had pulled out, and that is disappointing.

"I think the car parking issue may have something to do with it. City centre hotel developers are getting a little bit worried about where their guests are going to park and, if they're not allowed parking spaces with their hotels, how are they going to attract guests?"

Recent hotels built in the city which do not include parking are the Travelodge, the Quality Hotel, the Queen's Hotel and the Premier Hotel.

Updated: 10:38 Saturday, May 25, 2002