John M. Dunn previously had been awarded $4.7 million in damages by a jury and trial court after Dunn filed an inverse condemnation suit against the state.
In reversing the Vanderburgh Circuit Court, the appeals court said, "landowners have no property right to free flow of traffic past their properties."
Dunn claimed that his business was harmed when a concrete median was built on a nearby road, forcing patrons to travel a circuitous route to reach the hotel.
The median was built on Green River Road near its interchange with State Road 66 on Evansville's east side.
Dunn is chairman and CEO of Evansville-based Dunn Hospitality Group Manager Inc., which does business as Dunn Hospitality Group. The company develops and owns hotels in Evansville and Princeton and in Paducah, Ky.
Moreover, Dunn is a director of Vectren Corp., the gas and electric utility, and Old National Bank; and is chairman of the board of trustees of the University of Southern Indiana - all in Evansville.