The Palace Theatre, a heritage listed building in Melbourne, is set to be demolished to make way for a new five star hotel.

W Hotels and Resorts have their sights set on the prestigious 40,000 square metre Bourke Street location and have come up with a proposal that would see the old amphitheatre replaced by a 30-storey mixed-use tower.

Melbourne’s own Jinshan Investments announced the project this month and commissioned local architectural firm Bates Smart to design the hotel, which will feature 205 hotel rooms and 145 apartments.

Bates Smart has worked extensively with Crown on a number of hotel resort projects, restaurants and bars.

The tower design is rumoured to complement Melbourne’s culture while respecting the “mature” surrounding landscape in the area, which includes Parliament House. The project is also set to create a new Melbourne laneway between Bourke and Little Bourke Streets.

W Hotel Times Square

W Hotel Times Square

Development manager Tim Price of Sinclair Brook believes the luxury hotel will be a leading tourist destination, suggesting guests will spend over $1,000 in the city for each night they stay.

“It will really help to revitalise the ground level of the site,” he said.

The proposed $180 million project will be W Hotels’ second attempt to establish its brand in Australia. The hotel chain opened a W Hotel in Sydney just before the 2000 Olympics only to be bought out a few years later.

W Hotels and Resorts currently operates over 50 hotels across 24 countries, with the first W Hotel launched in Manhattan in December, 1988.

The proposal has already drawn the attention of the National Trust, which is concerned over exceeding the current 23-metre height limit in the area. That limit was imposed as following the controversial Hotel Windsor redevelopment, which saw a 25-storey building attached to the rear of the heritage hotel in 2009.

Windsor Hotel Redevelopment

Windsor Hotel Redevelopment

“Now the Windsor has opened the door, now all the developers are rushing through it,” conversation manager Paul Roser told The Age. “I think in 20 years this precinct could be transformed unless the minister draws a line in the sand.”

The Palace Theatre holds heritage value with the original architecture of the building reflective of the early 1900s. It has become a very popular music venue.

The Melbourne Heritage Group plans to oppose the project with spokesman Rohan Storey stating that the interior architecture is more historically significant than the facade of The Palace Theatre.

“But the city of Melbourne can’t or hasn’t protected any interiors yet,” he said.

The Palace Theatre Frontage

The Palace Theatre Frontage

Melbourne City councillor Ken Ong however believes the frontage is worth protecting.

“I’ll let the heritage experts fight it out over the heritage frontage,” he said. “From heritage perspective I hope it respects the planning controls and heritage overlays in the area.”

If the project is approved, the hotel is expected to generate 300 jobs during its construction and offer up to 620 jobs once built. Additionally, construction would most likely start next year with an opening date of 2016.