ROCKLAND — For Cabot Lyman, it was a simple calculation.

The city’s summer festivals, which bring lobster, boating and blues enthusiasts, collectively draw about 100,000. Yet the number of hotel beds in town is about 400.

So after buying a small building just off Route 1 in late 2010, Lyman decided to develop a hotel on the site.

The proposal generated opposition from neighbors, who objected to the five-story height Lyman has planned. The city planning board approved Lyman’s application in early June.

Not only are more lodging options needed, Lyman said, but the property on South Main Street was once part of the city’s commercial district and is emerging as such again.

“It’s a nice use of that site,” he said.

In 1952, much of the city’s South End burned, Lyman noted, and residential neighborhoods grew up where larger commercial buildings once stood. Yet even when Lyman first came to the area in 1978, the area had many more commercial structures.

“Everybody forgets that’s what was there,” he said. After the fire came the dominance of the automobile culture, and that part of town began to sprawl, Lyman said.

Today, the area near the intersection of South Main Street and Water Street includes a specialty grocery store, a coffee roaster and retailer, a magazine office and a restaurant.

“When that site went up for sale, we thought, ‘That’s a really good site for luxury condos,'” he remembers. But the poor economy and housing market intervened.

“Rockland wasn’t quite ready for pricey condos,” he said, “and a lot of people wanted us to do a little hotel there.”

So Lyman tore down the three-story building on the property, which was in rough shape, and began to build a foundation.

Before deciding on building a hotel, Lyman hired Boston and Portland firms to conduct market studies, and the numbers worked.

“It all started to make some sense,” he said, and a 26-suite, high-end  “boutique” hotel became the goal.

Another area entrepreneur, Stuart Smith of Camden, is planning to build a 55-room hotel a stone’s throw from Lyman’s property, which he took as confirmation of the need.

Lyman would not disclose the expected room rates for the hotel, but confirmed prices that are closer to the rates charged by four-star hotels in Portland. The people who buy original art in area galleries and patronize its fine restaurants will pay for a nicer room, he believes.

The construction budget is close to $3 million, according to documents filed with the city.

But at 26 rooms, the profit margin will be tight, Lyman said. Structures of three or more floors require compliance with the Americans with Disabilities Act and various fire egress codes, so he is incurring costs that could more efficiently be distributed over twice as many rooms.

“They’re going to be very elegant,” he said of the rooms, which will feature an art motif. And all the rooms will have views of the bay.

In his boatbuilding business, Lyman has seen his customers stay at a chain hotel on Route 1 in Thomaston and then switch to higher-end lodging in Camden. The boutique hotel would capture some of that market and others in that economic niche, he believes.