City hotels close to full

Want a night in the city? Book it now - prices may be on the way up.

Melbourne's hotels are at their busiest in 20 years with big international conferences, major events and rising international tourism leading to concerns of a room shortage and increasing prices.

The head of Melbourne City Council's planning department, Ken Ong, said a focus on city apartments may have led to an under-investment in CBD hotel rooms.

With the World Congress of Cardiology expected to attract 9000 delegates in May and the International AIDS Conference expecting 14,000 delegates in July, Cr Ong is concerned about a room shortage.

''It is very clear that as the city continues to grow with tourism, events and international arrivals - the hotel rooms in the city at peak period are just not sufficient,'' he said.

Darryl Washington, from Tourism Accommodation Australia, said the past 12 months had been the strongest for hotel occupancy in Melbourne in 20 years.

He said the demand was led by big conferences, major events and the city's curfew-free airport delivering increasing numbers of international tourists.

''Occupancy is running in the mid-to-high 80s [per cent],'' Mr Washington said. There was no hotel room supply crisis with more projects in the pipeline, but surging demand would put pressure on prices,'' he said.

''I think rates will creep up. Our occupancies are among the highest in the world, but our rates are way down the chart - we have very inexpensive rates,'' he said.

Average price for a city hotel room was $190 to $200, cheap by international standards.

Trent Fraser, chief executive of Choice Hotels Australasia, said demand was strong and rates would increase. ''From a CBD point of view, things are in a really good position,'' he said. Demand was weaker outside the city.

The strong room demand is leading to increased interest in Melbourne hotels.

On Monday the five-star Sheraton Melbourne opens with 174 rooms at the top of Little Collins Street.

''The Melbourne market performed incredibly well last year … this year we are expecting it to grow even further,'' Sheraton Melbourne director of sales Andre Jacques said.

The Age believes Crown has sounded out the government about a fourth hotel at its Southbank location (Crown said it has no such plans) and there is an application for a hotel and office development behind the Forum Theatre in Flinders Street.

In Bourke Street, there are plans for a 15-storey, 194-room W Hotel at the Palace Theatre site by Jinshan Investments.

''Jinshan anticipates a demand for this level of modern luxury in Melbourne, driven in part by the city's attractiveness for international business and proximity to Asia,'' development manager Tim Price said.

Brett Patterson from refurbishment company ISIS said it was looking at transforming Melbourne CBD office buildings into new hotels, with one identified for a potential 200-room hotel.

Tourism and Major Events Minister Louise Asher said there was no hotel room shortage in Melbourne. Hotel rooms in the CBD had increased by a third over the decade to 2013 and hotels wanted strong occupancy rates.