A business partnership has launched an investigation to see if the south Essex economy can be boosted by a better use of Two Tree Island, off Leigh.
However, the group of leading figures from the business community and council representatives rejected the idea of building a hotel on the island.
The South East Essex Economic Steering Group asked Dennis Williams, Labour councillor for Canvey North, to examine the prospects of erecting a hotel.
Steering group member Mr Williams spoke with planning officers, who said a hotel was "unlikely to be acceptable".
The island, which straddles the boundaries between Southend and Castle Point councils, has been classed as a site of special scientific interest - an SSSI - and a nature conservation area.
Mr Williams said: "We've looked at ways of generating economic development and tourism. One of our jobs has been to look at the hotel sector - quite strong in this part of Essex.
"One of the places mentioned by the group was Two Tree Island, but its a conservation area and there will not be any hotels on Two Tree or any investigation into that idea."
But Mr Williams said the steering group was investigating other potential opportunities on the island which would not harm the environment.
He added: "There might be other ideas that fit into the conservation area or SSSI but it would definitely not be a hotel.
"One of our roles is to attract more tourists into Essex, and that includes Two Tree Island.
"There might be ways of attracting more tourism to Two Tree Island that fit in with its nature conservation status."
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