The group behind the development application said they were responding to demand in the market for more hotel rooms within walking distance of Baylis Street.

Wagga Best Western and Ambassador Motor Inn owner Tony Neale told The Daily Advertiser that if the city's hotel industry was not kept sustainable, the resulting drop in standards would damage tourist numbers.

"In the current market conditions, Wagga has too many hotels which means too many beds and not sufficiently high annual occupancy rates to justify more motels," he said.

"Visitation is the whole pie and the more hotels you put in Wagga without increasing visitation, the smaller each slice of the pie is for each hotel."

Mr Neale said online review sites and word of mouth on social media had a lot of influence on travel decisions and if hotels were forced to cut costs it would harm the city's reputation.

On Monday, Wagga councillors will consider a development application for a 42-room hotel at 81 Forsyth Street, a few metres from an intersection with Baylis Street.

Mark Churcher, the applicant for the development of behalf of HTZ Investments, told The Daily Advertiser that the proposed hotel would be "good for Wagga" and CBD traders.

"The way Wagga is growing and all the sporting weekends and tourism, business is growing in the area and they are crying out for accommodation," he said.

"It is aimed to compliment the other businesses in the CBD; the hotel will not be supplying food and beverage.

"It will be up to 90 people staying there who will go to the restaurants, bars and food outlets in the city and help the economy."

There are already 148 new hotel rooms due in 2021 from a Holiday Inn development at The Mill.

However, central Wagga will also lose some accommodation next month when Wagga Beach Caravan Park's lease expires to make way for the Riverside development.

Council staff have recommended the Forsyth Street application be approved despite raising "key issues" with vehicle access and the supply of required car parks.

Wagga International Hotel owner Basil Berrigan, whose nephew Joel Berrigan owns the Forsyth Street site and works at the International, said new hotel developments had to abide by the planning rules.

"I think it's a good location but the application could be improved...it doesn't comply with the car parking code or urban design," he said.

"Vehicles being able to enter and exit in a forwards direction is one of the council's main requirements because backing out causes a traffic hazard."

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