Hotels in the Wollongong CBD are "virtually full" five nights a week, with top hoteliers now charging more than $1200 for their best rooms.
This high demand - and concerns about the future supply of hotel rooms as major events in the region boom - has prompted a push from all levels of government to entice new investors.
With most of the city's 1000 rooms booked out for most weekends a year, the tourism industry is now in talks with up to five major hotel companies looking to invest in the region.
Destination Wollongong boss Mark Sleigh said the latest tourism figures showed overnight visits to the city were up almost 15 per cent compared to a year ago, while hotel occupancy is at 87 per cent.
"Tuesday to Saturday nights, the CBD rooms are virtually full," he said.
"Sunday and Monday are softer but depending on business events can also be busy."
Mr Sleigh said the number of people attending business events in Wollongong skyrocketed this year, largely thanks to the Novotel's overhaul of its dated interiors.
The hotel now charges between $400 and $1250 a night for its rooms, driven by the high demand and limited supply.
"The Novotel investment attracted a whole new level of interest in business events from companies who would not normally have thought of Wollongong as a destination for events," he said.
"It is now one of, if not the largest, conferencing hotels in regional Australia and that is so important for all hotels because if the Novotel has a 500 person conference, the whole town is full."
With business events expected to grow - and events like the world championships for bicycle road racing set to bring hundreds of thousands of people to town in three years - Mr Sleigh said the CBD could easily support another two major hotels.
We've been told that Wollongong has the best case for building a hotel in regional Australia, well and truly, and we could support up to 400 more beds.
In the past decade hotel developments in Wollongong have been stagnant, and two large hotels - the Ibis and Rydges - were converted to university accommodation and a mental health facility.
The Sage, near the golf course, was the last to open seven years ago, while other developments have faltered.
For instance, the "Signature" high rise, underway on Regent Street, was approved as a hotel, but the hotel was dropped when residential apartments became more viable.
Likewise, a 16-storey hotel and apartment complex on Belmore and Young Streets - which was to have 87 rooms - was approved in 2016, but then re-lodged as a residential complex last year.
But Mr Sleigh said the slowing apartment boom, as well as continuing evidence about the need for more hotels in Wollongong, was drawing hotel investors.
"We've been told that Wollongong has the best case for building a hotel in regional Australia, well and truly, and we could support up to 400 more beds," he said.
"We want to build our capacity in a sustainable manner, and we think two hotels being built over the next few years would be ideal."
There are about 600 hotel rooms in the city centre and beach precincts, while across the Wollongong LGA there are about 1000.
Mr Sleigh said he had been in talks with five hotel groups keen to invest in Wollongong, and hoped to see two projects get off the ground.
"We're lucky to be in a position where I don't think any level of government could do any more than what they are doing at the moment," he said.
"We're at a point now, compared to five years ago, where everyone is working together to make this happen and it's incredibly positive."
Wollongong MP Paul Scully has been involved in the talks, which have also included Wollongong City Council and federal representatives.
He said he would like to see "iconic" sites, like the long-vacant old David Jones building in Wollongong mall being turned into visitor accommodation.
He also said the push to build more rooms had become more urgent in recent months, due to talk of a residential redevelopment at the Boat Harbour Hotel, at Belmore Basin.
The site was sold in 2018, and while no plans have been lodged with Wollongong council, Mr Scully said it was widely thought the site could be redeveloped into apartments.
"If we're going to become an event tourism town, we need the accommodation that supports it, and there are a range of issues over availability and price of land but, as I understand it, there's no shortage of interest," he said.
"That's why we got together to see what we can do from all three levels of government to get things kicking along."
"I don't know if it's possible, by from my view, the old DJs would just be a perfect spot."
Cunningham MP Sharon Bird said the capacity to boost hotels through federal government action was limited, but that she was continuing to advocate for any roads and tourism infrastructure to support the sector.
Likewise, Whitlam MP Stephen Jones said he was keen to ensure the hotel sector "didn't go backwards" with the sale of the Boat Harbour.
"If we want this to be a destination where people come, stay, spend some money and create jobs and industries that employ people then we need accommodation," he said.
"We need hotels and motels at every level of the chain, from budget and family to business and five star."
Mr Sleigh agreed, saying extra hotel rooms would have a flow-on effect across all businesses in Wollongong.
"Our cafes, our restaurants, our small bars all benefit but also our petrol stations, newsagents, hairdressers," he said.
"The more visitors we have, the more money they spend and the more jobs are created in the local economy."
"Overnight visitors obviously spend more money than day trippers, so having available and affordable hotel stock of all levels is vital if we want this increase in visitor numbers and visitor spend to continue."