Tough new laws introduced late last year mean Ivar Hunt can no longer operate the hotels as accommodation houses unless he complies with rooming house standards.

He will cease offering emergency accommodation from March, leaving the city with no emergency housing options from that time.

“I will be looking at how to redevelop the properties into other accommodation, which will be more upmarket, and not cater for emergency housing at all,’’ he said.

“I won’t go back now, not in a situation where we have to give people instant tenure – the way some people behave, you wouldn’t do it.’’

Mr Hunt said he was forced to make the decision after having the hotel’s status changed under the new legislation.

He said he complied with all safety requirements of hotels but could not meet the legislated requirements of a rooming house.

He said the changes in legislation meant he would have no power to immediately evict a guest at the hotel, and would need to significantly upgrade cooking facilities.

“If someone stays at a hotel, there is no implied tenant-landlord residential agreement until they have stayed for 60 days,’’ he said.

“Under boarding house rules, they have tenure from day one.

“It is unfair for me to go from a hotel to a boarding house and I can’t ask them to leave.

“I am not a boarding house – my average stay is 10 days.

“Why aren’t they sitting down with me and answering can I be a hotel, can I be a bed and breakfast?

“We are the only people in town who are prepared to do this.’’

Mr Hunt said he was reluctant to commit to installing more cooking facilities at the hotels because of the increased fire risk.

"We get about four false alarm call outs each year and they usually relate to people leaving food burning in the kitchen,'' he said.

"Provision of an oven and four burners for each 12 guests would not be practical.''

City of Greater Bendigo director of planning and development Prue Mansfield said while the two hotels had few minor improvements to make in relation to safety, the issue remained that they must comply with new state government legislation.

"We assessed every property that houses people short-term and in our view those two properties are rooming houses,'' she said.

"We have had legal advice to say they are rooming houses in accordance with the legislation.''

The decision can be appealed through Consumer Affairs Victoria.

Haven; Home Safe acting chief executive Trudi Ray said "this is a critical situation for emergency housing options within Bendigo''.

"We are in discussions with the Department of Human Services and other stakeholders to advocate for the position of those that are homeless or in housing crisis,'' she said.