Councillors are next week expected to approve plans for a 59-bedroom hotel in the historic buildings on the corner of Leith Street and Waterloo Place, to be run by the Irish-American Fitzpatrick Hotel Group.

At the same time, the Apex hotel firm has already been granted permission to build a £13 million complex in former council offices on the north side of Waterloo Place.

Rather than forcing the two developers to contribute towards the city's tram scheme, the usual payments to the council will be used to improve the footpaths, lighting and public entrances at Calton Hill. The steps and ironwork at the Regent Road entrance will also be repaired.

Dublin-based Craypool Investments, which is behind the latest hotel plans, will be told to pay £15,750, while the Apex developers have been ordered to provide £45,000 towards the project.

Lib Dem city centre councillor Charles Dundas said: "Anyone who visits Calton Hill will realise that investment is needed in the area.

"(But] there's a combination of new business and new development coming to the area, which is raising the tone and bringing life back to what has been quite a quiet and sometimes deserted area. We can combine that with contributions towards physical improvements.

"There are a lot of people who will never go to Calton Hill after dusk, and I can understand why, but it's a fantastic view they miss out on and I think everyone should be able to see it at nighttime."

Tory city centre councillor Joanna Mowat said the council had "a duty" to improve the appearance of the area.

"Calton Hill is an important heritage spot that attracts tourists, and it's iconic – not only to look at, but to look from," she said.

"I do get representations from all over the city asking if we can do something about it."

If approved by councillors, the new hotel at 17 and 19 Waterloo Place will be housed in a block of three-storey A-listed buildings, designed in 1815.

Alongside the 59 bedrooms, there will be a main bar and reception area at ground level, a restaurant and bar at basement level, and three conference rooms. The bedrooms will be above existing shops.

The family-owned Fitzpatrick company runs the Fitzpatrick Castle Hotel on the outskirts of Dublin, as well as the Irish capital's "design hotels" the Morgan and the Beacon.

The business began when Paddy and Eithne Fitzpatrick converted the castle, which overlooks Dublin Bay, into a hotel in 1971. It is now run by their daughter Eithne.

Their son John runs the Fitzpatrick Grand Central and Fitzpatrick Manhattan in New York, while his brother Paul runs the Morgan and the Beacon. Property experts believe the eastern part of Edinburgh's city centre will be a major boom area over the next few years, thanks to the advent of the tram system, the redevelopment of the St James Centre and the new Caltongate development.

The nearby Apex Hotel at 23-27 Waterloo Place will have 182 bedrooms, complete with a swimming pool and leisure centre.