Work has begun on the 128-room privately-run hotel on the corner of Bayne and Lucan streets.

It is the first four-star hotel to be built as part of Art Series Hotel Group's expansion to regional Victoria.

Art Series creator, Asian Pacific Group chief executive Will Deague said it was an exciting addition to the $630-million government-funded Bendigo Hospital Project.

City of Greater Bendigo Mayor Barry Lyons commended the new development at yesterday's announcement, saying it would fill a gap in the city.

"A high-rise hotel is something that has been sorely missing and it didn't take much encourage for Art Series to build it here," he said.

"It will help put Bendigo on the map as a unique destination for art lovers around the world. It's an economic boost and a boost all round."

Cr Lyons said while most of the construction of the hotel would take place in Melbourne, many local jobs would be created by the development.

"It certainly hasn't robbed us of jobs and has created employment were there was probably under-employment," he said.

Construction company Hickory's business development manager Damien Crough said the hotel would be built in just seven days.

It will be the first hotel to be built using the Unitised Building System. Many of the building modules will be made in a Melbourne factory and delivered in pieces to the Bendigo construction site.

Art will be a major drawcard for the new hotel, with the group joining forces with Bendigo Art Gallery to help make art more accessible to visitors.

In keeping with the Art Series Hotel concept, the Bendigo Studio will feature original artwork and sculptures from an Australian artist, throughout the hotel rooms, communal spaces and hotel grounds.

The hotel will be named after the artist, to be announced in February next year.

Art classes will also be made available on site, as well as regular artisan markets, public art displays and interactive art experiences highlighting Bendigo and Melbourne work.

Mr Deague said the hotel would offer a platform to showcase local artwork. “Bendigo has emerged as the regional centre for arts and culture in Victoria making it the perfect place to launch our studio-inspired hotel concept,” he said. 

The modules will be installed in early December, with the hotel expected to open in May 2014