International hotel chains are lining up to run a new hotel under development in Rotorua's central city, as the property magnates behind it turn their eyes to new developments within the city.

Work is under way to transform the Zen building on Arawa St from offices into a 140-room four-star hotel.

The hotel is being developed by well-known property magnates Chow Group, who plan to open the new hotel early next year.

John Chow said they were shortlisting from 10 international hotel management chains that wanted to operate the hotel.

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Mr Chow said he expected to be able to confirm the winning tender in a couple of months.

"In the meantime we are working closely with the Rotorua Lakes Council and the mayor to make sure the resulting complex is something Rotorua will be proud of," he said.

John Chow (second from right) with the design and project management team. PHOTO/SUPPLIED
John Chow (second from right) with the design and project management team. PHOTO/SUPPLIED

Mr Chow said they were working with designers Design Group and project manager RDT who were doing a "great job turning the tired Zen office building into a beautiful hotel".

"My brother Michael and I see Rotorua as a safe investment bet because of rocketing tourism numbers, so don't be surprised if we end up investing into other local initiatives."

Mr Chow and his brother Michael formed Chow Group in 1999 and own 16 other commercial properties, mostly in Wellington and Auckland.

The Chows were once known as the "brothel brothers" after putting in plans for a super-brothel in Auckland. The 15-storey Palace Hotel fell victim to fire in 2010 and was eventually demolished.

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They decided against going ahead with the super-brothel and put the land back on the market. They also own two clubs on Auckland's Karangahape Rd and Gore St.

Mr Chow told the Rotorua Daily Post that demolition work was under way inside the Zen Centre and they hoped that would be completed by the end of the month to allow redevelopment.

He said Rotorua was good value compared with other cities, and was a good place to do development work.