The decision is hugely significant as the redevelopment involves gutting a series of protected buildings, including the Clarence itself, leaving just the facades.
Revised plans will have to be submitted to Dublin City Council as the planning board directed certain changes.
The proposed penthouse level facing Essex Street at fourth floor level will have to be reduced in length by four metres on the western side and four metres on the eastern side. The board also stipulated that “prior to the demolition of the protected structures, all existing buildings and interiors shall be preserved by record” and the drawings lodged with the architectural archive.
The massive revamp was granted permission by Dublin City Council in November but that decision was appealed.
An Bord Pleanala then directed that an oral hearing take place.
Planning officials have given the green despite the Department of the Environment saying it did not believe the plan was of such architectural merit as to justify the demolition of six protected buildings.
The U2 band members, along with property developers Paddy McKillen and Derek Quinlan, can now press ahead with the transformation of the 44-bedroom boutique hotel into a 141-bedroom, five-star hotel and spa, complete with restaurant, bar and fresh food market.
During the oral hearing, The Edge, David Evans, said: “If it (the revamp) goes ahead, it will be the ninth different version of a hotel on that site. We want to keep the infrastructure in the city – we don't want it to turn into apartments. We don't want it to be lost.”
But the plan caused controversy among conservationists as it involves a massive reconstruction of the Clarence, an art deco building dating from 1937, four Georgian buildings from the early 19th century and Dollard House, which was built in 1886. All are listed buildings and only the facades along Wellington Quay in the south inner city will be preserved.
It is proposed to re-use skirting boards, fireplaces, floorboards and all other internal features in the new building.
A huge glass atrium, which will be accessible to the public, will be at the heart of the hotel, with the skycatcher allowing light to enter the hotel.
The basement will be home to a swimming pool called Dubh Linn, with a Sky Bar at the top of the building providing views across the city.
But An Taisce and others had claimed that the plans completely disregarded the council's conservation policies.
“This scheme has a metal roof, and the metal roof looks like a flying saucer.
“The building in no way complements the character of the quays. It is hubristic, contextually illiterate but certainly entertaining. The effect is to create a silly set-piece,” conservationist Michael Smith claimed.