The Southern Highlands could lose up to a quarter of its motel and hotel rooms over the next two years as owners take advantage of high residential land values, Tourism Southern Highlands chairman Peter Harman said last week.
Addressing council's Economic Development Committee, Mr Harman said the Southern Highlands accommodation industry had been crippled by the property boom.
With many accommodation businesses located in residential zones, selling or developing properties for residential housing offered a better return for many owners, he said.
Rising land costs also had seen a move away from owner/operated establishments towards specialised hotel management companies working under an agreement or franchise with hotel developers.
"There comes a time, with the property cycle peaking, that running a hotel is not the best yield," he said.
Mr Harman said on anecdotal evidence, the Southern Highlands could lose up to 300 rooms from a total of 1200.
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