Developers had signalled they wanted to turn the land into a residential subdivision, but are now considering adding a motel as well.
In 2004, the Waitaki District Council granted resource consent to Worthwhile (Oamaru) Ltd for the $10 million redevelopment of the old hospital and turning the maternity annexe into the Eden Gardens Motel.
It was announced earlier this year the site would be cleared to create an 82-lot residential development.
However, senior project manager Hari De Alwis said management staff were discussing the possibility of adding accommodation on the site, that already hosted Eden Gardens Motel, and residential dwellings.
Waitaki Tourism Association chairman James Glucksman believed a second motel on site would be good.
"If they can make the business case for themselves, then I think that’s great.
"The only thing I would say is given the large numbers of motels we have in town, my personal opinion is, I’d like to see more higher-end accommodation in town, four or five star."
He said more accommodation options were needed.
Mr De Alwis said he was happy with the project so far and work was progressing smoothly.
"We have completed almost all of the site clearance supposed to be finished mid this month."
Oamaru has more than a dozen motels.
