A proposed five-star hotel in the city centre has drawn the support of the Launceston Chamber of Commerce.
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The hotel - under Singaporean company Global Premium Hotels' "Fragrance" brand - would be at the site of the Alfred Harrap and Sons warehouse on Cimitiere Street.
After initially being approved in 2020, the plans have returned to the City of Launceston Council this month with a removal of two floors and reduction in rooms from 230 to 179.
In the grip of a housing crisis, the Launceston Chamber of Commerce chief executive Will Cassidy said the need for more homes shouldn't dismiss the need for hotels.
"We can't discount the need for more hotels in Launceston," Mr Cassidy said.
"Considering these statistics (of growing demand for visitor beds), and that Launceston doesn't yet have a five-star rated hotel, we can really see the potential economic activation for this development being phenomenal for the city."
More housing is needed to support those moving into the region to fill worker and skill shortages, however Mr Cassidy suggested higher density precincts on the outskirts of the CBD could be more appropriate.
"But to have someone who owns the property and is prepared to build what the city is needing (a hotel), there shouldn't be any stopping it," he said.
"The proposal incorporates the heritage of the area and I think it will be good for Launceston. It will offer so much potential for our city."
The 10 storey build isn't the only major hotel being proposed for Launceston.
The contentious Gorge Hotel has fought through tribunals processes for a nine-storey hotel on Patterson Street.
While the old Tafe building has been proposed to be a premium art hotel.
On the use of prime locations developed in the CBD, Launceston councillor Tim Walker said the council wasn't seeing developers put forward plans for housing.
"There's no medium density housing in development that I've heard of," Cr Walker said.
He said homelessness was a separate issue to CBD housing.
Cr Walker said councils had a role to play to incentivise more medium density housing and it would "be nice to be ahead of the game".
Previously, Launceston mayor Matthew Garwood said private development projects drove the market, and that the council had provided developers resources into new inner city residential development projects.
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