A proposed eight-storey hotel in Taupō's CBD is facing an uncertain future as mediation between developers failed to reach an agreement.

In a mediation facilitated by the Environment Court, developer Cypress Capital Investments Ltd and the Taupō District Council were unable to reach an agreement acceptable to all parties, including other interested parties.

Cypress Capital is allegedly planning to file a proposed evidence exchange timetable as soon as possible, with the matter being in court early next year.

An artist's impression of the proposed hotel.

The mediation had been ongoing since the proposal was turned down by independent resource consent commissioners in February, following an application hearing in December last year. Cypress appealed the decision on March 6.

The 70-unit hotel would be located at 29 Tuwharetoa Street, and feature ground-level retail, a roof-top restaurant, bar, spa pool, and three levels of basement car parking. The hotel proposal attracted 72 public submissions; 49 in opposition, 19 in support, and four neutral.