Plans for a three-star hotel have been put on ice after developers withdrew their appeal to the planning inspectorate.
The 59 bedroom accommodation envisaged for Greenford Road in North Greenford was refused by council officers in December but the man behind the project lodged an appeal to try and reverse the decision.
But it is understood he is resigned to defeat and has decided not to fight the decision.
Developer Ali Musani would not comment on why the appeal had been withdrawn, but said: "We're now looking at various options for the site but I think it's a missed opportunity.
"About 25 jobs would have been created and the £7m development would have been a catalyst for regeneration in the area.
"There isn't the footfall in the area to sustain other types of business, this would bring people in.
"We've been negotiating this for about two and a half years and changed the plans about four times so that it was at an acceptable scale."
But Frank Kilduff, chairman of the North Greenford Residents' Association said the plans were not suitable so close to a residential area.
He added: "The carpark is in a side street and will cause a lot of disruption with guests and delivery drivers coming and going."