PORTLAND — The Planning Board on Monday approved a proposed Old Port entry in the city’s expanding hotel market.

The board unanimously approved the site plan for the 123-room Canal Plaza Hotel, which would also include a restaurant and more than 700 square feet of retail space. The hotel would be built on what is now a parking lot at the northeast corner of Fore and Union streets.

The board had been scheduled to formally consider the site plan at its Oct. 29 meeting, but postponed the discussion as Hurricane Sandy approached. The developer, commercial real estate firm East Brown Cow, used the extra week to address concerns raised by city planners in an earlier memo to the board.

On Oct. 26, planners outlined a zoning waiver that would be necessary and more than a dozen conditions the developer would have to meet before a building permit could be issued for the hotel.

After discussion with the developer and a hearing of public comments Monday, the board fine-tuned some of those requirements.

One concern was the use of wash lighting atop the seven-story hotel. Plans call for illuminating the exterior of the top floor, which would contain rooms with private terraces.

Planners had raised concerns that the lighting would emphasize the building’s height and be out of keeping with the Old Port Historic District, whose border lies directly across Fore Street.

Despite its smaller, older neighbors, “the building does warrant attention in the skyline,” according to Patrick Costin, head of the hotel’s design team, Canal 5 Studio.

“Turning off the lights, to pretend the building is not what it is, is not a successful strategy,” he said.

Board Chairwoman Carol Morrisette asked,”Is (the exterior lighting) going to be a beacon in the night or a candle at the window?”

Costin assured the board that the lighting would be a “candle” that would be visible only as a “glow” at street level.

With the approval of the site plan, East Brown Cow must now provide a performance guarantee to the city for the costs of public improvements, and then obtain building permits before beginning construction.

Meanwhile, the approval is another sign that Portland’s hotel market is heating up.

The most recent competitors include a 120-room Hampton Inn and a 179-room Residence Inn by Marriott, both of which have been built in the past three years.

Earlier Monday, the Planning Board held a workshop discussion with developers of a proposed 110-room boutique hotel at 390 Congress St., the former Portland Press Herald building. In addition, a 131-room Courtyard by Marriott hotel is being proposed for a vacant lot at 311 Commercial St.

And at the corner of Congress and High streets, work continues on an extensive, $30 million renovation of the 85-year-old Eastland Hotel. The renovation, expected to be complete in early 2014, will add 58 rooms to the hotel.

William Hall can be reached at 781-3661 ext. 106 or whall@theforecaster.net. Follow him on Twitter: @hallwilliam4.

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An artist’s rendering of the proposed Canal Plaza Hotel, which would be built at the corner of Fore and Union streets in Portland. The hotel received site plan approval from the city’s Planning Board Monday night.