A room at the Realm Hotel. Developer Jure Domazet says more are needed in the Barton area.

A room at the Realm Hotel. Developer Jure Domazet says more are needed in the Barton area.

A Canberra developer of two hotels in Barton who is planning a third, 120-room hotel in the inner-south suburb believes the market has strong growth potential.

Doma Group director Jure Domazet said people assumed demand came from Parliament House staff, but national and international businesses dealing with the Australian government also needed a place to stay.

On seven storeys, including four levels of parking for 500 vehicles, Barton's latest hotel's design will follow a trend from Europe and the US of smaller rooms.

Mr Domazet said less service would be offered, but core elements of a ''great bed and shower'', and access to a large two-storey common room with lounges, private reading areas and work areas would be provided.

''Our guests will want or need to be in the area but do not necessarily spend much time in their rooms,''Mr Domazet said.

''They don't need the services that a typical hotel offers, nor do they need the private space that a typical hotel guest needs.''

A residential and office block developer, the Doma Group has also become a large hotelier in Canberra and NSW, having built the five-star Realm and Burbury hotels in Barton.

The latest hotel, between National Circuit and Darling Street, to cost $27 million, would have views of Parliament House, and other landmarks and a retail component fronting Windsor Walk.

Occupancies in Canberra increased by 0.5 per cent to 74 per cent from March 2011 to March 2012 according to Colliers International hotels investment report, while the average room rate in Canberra increased 5.8 per cent to $161.24 over 12 months to March.

Revpar (revenue per available room) increased 6.4 per cent to $119.34.

Mr Domazet said historically the inner south had all the best facilities but did not match it with the quality of accommodation.

''Having higher quality accommodation in the inner south is a positive for us as it gives the market a critical mass in attracting guests,'' he said.

The development will shade part of the York Park conservation site for the golden sun moth and a natural temperate grassland community.

Under Commonwealth legislation, comment is being invited on whether more studies should be done.

If approved, construction should begin about February and would be completed by July 2014.

This would create 100 jobs at the peak of work. A second stage development on the site would create an office building for either the private sector or government.