A closure order was served on Himley Country Hotel last week by Staffordshire Police and South Staffordshire Council due to concerns over trouble but was dismissed by magistrates.
The decision, which dealt a blow to police and council chiefs, means the hotel will be able to reopen as planned in September.
Police chiefs felt antisocial behaviour associated with the School Road venue was unacceptable but Cannock magistrates said they were concerned closing the venue and having it potentially left abandoned could lead to more trouble.
Hotel managers have now pledged to regain the trust of locals.
They blamed many of the issues on early-release prisoners who were staying at the hotel during the pandemic.
Chief Inspector Dave Wain, from Staffordshire Police, said: "We respect the decision of the court, but we will be closely monitoring the situation as the wellbeing of local residents is our primary concern.
"We will also continue to work closely with our partners in South Staffordshire Council and will take appropriate action."
South Staffordshire Council took action as it said it wanted to ensure the district remained one of the safest in the country.
Acting council leader Roger Lees said following the court's decision: “South Staffordshire Council will continue to support residents to feel safe in their local community."