The Carlsbad City Council has rejected plans to build a second hotel next to Legoland.
Instead, the council agreed to allow Grand Pacific Resorts to expand.
The company operates a large resort and a timeshare property near Legoland.
Legoland and Grand Pacific submitted competing proposals to the council for an empty 3.2 acres owned by the city and its water district.
Grand Pacific plans to add 71 hotel rooms to the resort and brand it as a Westin hotel.