Councillors approved the development application at the most recent council meeting on Tuesday, September 28, subject to a number of recommendations being incorporated into the plans.

The development, which is intended to be named 'The Upper Hunter Backpackers', will consist of a two-story building with accommodation located on the first floor and parking and entry located on the ground floor.

The building will feature 11 off-street car parking spaces and three motorcycle parking spaces, ten accommodation rooms, a lift from the ground floor, a common room and a manager's room as well as kitchen, washing and drying facilities.

According to a development assessment included in the council report, the proposed backpacker's accommodation would "support economic activity, provide additional short-term tourist and visitor accommodation and support jobs in the Muswellbrook area."

Muswellbrook Shire Mayor Rod Scholes said the developer behind the proposed backpacker accommodation had identified a gap in the market for cheaper short term accommodation options in the area.

"The drive-in-drive-out workers and the support contractors for the mining industry basically swallow up the only cheap and medium priced accommodation," Mr Scholes said.

"So there is a gap where people like backpackers can't even come to town."

Mr Scholes said there were many industries in the Muswellbrook area which could help encourage backpackers to visit.

"We do have some industries that also lend themselves towards backpackers, such as the wine industry, the olive industry and even the dairy industry for that matter," he said.

Additionally, the local hospitality industry and nearby towns could also benefit from a future increase in backpacker travellers to Muswellbrook.

"We've got Denman, which is a cute little touristy town, nearby and very often backpackers tend to provide the casual staff for the hospitality industry," Mr Scholes said.

"Hospitality and agricultural support tend to be the main areas backpackers go into and hopefully we'll attract some for those industries."

The council received two submissions from the public in relation to the development, highlighting security, noise and traffic concerns of neighbouring residents.

A Crime Prevention Through Environmental Design (CPTED) assessment made five recommendations including additional security lighting, fencing and roadside mirrors to prevent blindspots for drivers on the street, which the council approved.

An on-site manager will also need to be present at all times to manage the behaviour of guests and maintain the cleanliness of the site.

Mr Scholes acknowledged the potential impact on neighbouring properties, but said the zoning of the area had an impact on the council's decision.

"It's a perfect situation for (a backpacker's), except that it will impact on the neighbours and that is a bit unfortunate. That was the one concern we did have," Mr Scholes said.

"Unfortunately, the way the area is zoned, it was a development that really could not be refused for that area."