The Chows, who own a string of Wellington brothels and strip clubs, are joint applicants.
The Palace Hotel was demolished by the council in November 2010 when it began to collapse during work undertaken by the Chows to redevelop the building as a brothel.
A council report did not find a specific cause of the building's failure.
Christopher Dempsey, a Waitemata Local Board member and planner, said yesterday that he was horrified and sickened by the new plans.
"It's disrespectful to the memory of the Palace Hotel and to the many thousands of people who appreciated and cherished it," he said. "The whole thing is appalling and smacks of downtown Wainuiomata and I invite the Chow brothers to retire there. They are not welcome in this city."
Martin Green, the Chows' planner, described the 522sq m site as "unremarkable".
"The proposal involves the construction of a new 15-storey building, designed to comply with all of the development controls," Mr Green's application said, acknowledging that five levels of non-permanent accommodation were not a complying activity.
"The building is to be used for a combination of non-permanent accommodation and permitted commercial activities including food and beverage, retail, entertainment and gathering," Mr Green said.
Restrictions would apply on how much detail could be shown on the outside media screen. "The applicant is mindful of its obligations under various bylaw provisions and will not be using the media screen to depict inappropriate or unlawful information," Mr Green said.
The council's urban design panel said the project could add to the city's "up-and-coming 24/7 entertainment precinct and includes five entertainment activities over 15 floors including a hotel, nightclub, several bars, restaurants and offices".
The panel initially found the facade design of the building's middle and upper levels would do little to add to that precinct, so changes were made.
It said a transparent nightclub entrance at street level - one of five separate entries to the block - was welcome.
Chow Group says Auckland is a key part of its expansion strategy.
"As well as their successful investment property portfolio, Chow Group have diverse business interests such as recently acquiring the licensing rights for Penthouse Clubs for Australasia, the first of which will open in Auckland in early 2013, and expanding into the fitness sector under the Exodus brand, both of which are operated from properties owned by the group."
The Auckland site is listed in the group's portfolio: "The existing Aurora Hotel was to be rebranded as the Palace and extensively refurbished.
"However, during refurbishment, the exterior walls developed cracks, leading to the total demolition of the building ... amongst huge publicity. The Chow Group intends to build a new Penthouse Club on the site."
