The project, funded by investor MyState Limited and developed by MVP, is expected to create about 50 ongoing jobs. Completion is scheduled for mid-2027, with the first guests anticipated later next year.
Bundaberg, four hours north of Brisbane, is a key gateway to the southern Great Barrier Reef, but has not attracted significant short-term accommodation development in two decades, according to Bundaberg Regional Council.
Mayor Helen Blackburn said a hotel demand study revealed the region was "800 beds short every night." She described the new hotel as "one step towards bridging that gap."
Cr Blackburn noted that attracting hotel developers had been difficult because of the existing stock of aging motels. "Those older motels sell their rooms at a cheaper rate, which then doesn't give investors the confidence to think that if they build a new hotel, they can get the price for the rooms that they need," she said.
MyState chief executive Brett Morgan pointed to visible demand. "Every time you go down the street in Bundaberg, there's no-vacancy signs everywhere," he said.
A spokesperson for MVP said the company hoped the hotel would "be a destination of choice for travellers to the region and will bring more travellers to the region."
Bundaberg Tourism chief executive Duncan Littler said the development would cater to both leisure and business travellers. He noted that more than 750,000 people visit the region each year, staying for more than 2 million nights. "We hope that investments like this will also encourage other [tourism] operators, potentially even airlines, to consider investing in the region," he said.
Cr Blackburn said other accommodation applications were in the pipeline, including potential hotels, student accommodation and aged care facilities. She did not provide further details.