Whitehall planning inspector Hannah Ellison said the site next to the Mere Park Garden Centre, and the Premier Inn and the Three Fishes Beefeater restaurant was not a suitable location for the proposed development.
EG Group Ltd, which has similar sites in Shropshire, including the Starbucks and service station off Thieves Lane in Shrewsbury, appealed to the Planning Inspectorate after permission was refused by Telford & Wrekin Council.
The application was not controversial in terms of comments received by planners. Newport Town Council saw it as a possible opportunity to ask for a monetary contribution from the developer go some way to offset the impact of increased traffic.
Ms Ellison decided that the council was correct to oppose the plan on policy grounds.
The inspector said because there was no link between the garden centre/hotel and restaurant site it should be considered as being in the countryside. A site visit was made there on July 18.
In the decision letter dated August 18, the inspector said: "The appeal site is an undeveloped, grassed parcel of land bounded by mature hedgerows and trees.
"It has a very open feel and the golf club beyond also contributes towards this characteristic."
The inspector added that there is no suggestion that the appeal site constitutes previously developed land nor does the proposal involve the re-use of existing buildings.
She added that "the proposal would have to have a clear association with and/or functional connection to an existing site.
"Without doing so, it would simply be a new use rather than an extension, which could result in unrestricted and unlimited sprawl of development in rural areas."
It had been suggested that planning permission has previously been approved for development on the appeal site.
But the inspector said the approvals appear to have been a considerable time ago and, detail put to the inspector was "extremely limited."
"Taking all the above into consideration, and notwithstanding the lack of objections from statutory consultees, the appeal site does not represent a suitable location for the development," the inspector concluded.
"Although the locational requirement for the proposal to be sited adjacent to the strategic highway network to provide for the welfare and comfort of motorists is appreciated, this does not automatically justify the development from being sited in a rural location.
"There is a retail park and strategic employment area located to the south of the appeal site which contains a vast number of businesses including services for motorists. It appears to be within the built-up area of Newport and is also immediately adjacent to the strategic highway network.
"The evidence does not robustly demonstrate why locating the development within these sites, or others within the built-up area, would not be suitable."