Aurora managing director Ian Drummond said the new work would be extra to the $1 million already being spent on renovating and extending the conference, function and gaming facilities at the Kingscote hotel.

“We’re also developing a master plan for the coming decades for the back area of the hotel and pool area,” Mr Drummond said.

All the renovations should be complete by Christmas and will include an artificial turf beer garden and smoking area.

He said the Ozone was doing well and all signs augured well for future plans to develop more accommodation.

“We’ve had to turn away two groups in October because we’re fully booked. The State Government is enthusiastic about building more accommodation on the island.”

Mr Drummond said there was no danger of oversupply of accommodation on the island.

“There are only nine establishments on the island with 15 rooms or more. There are only 290 rooms in those nine places and probably about 400 on the whole island. This creates problems for tour groups if they must accommodate people from the same tour at American River, Penneshaw and Kingscote.”

He said providing more accommodation could solve other issues, such as transport services, a sort of “build it and they will come” model.

Mr Drummond has experience in accommodation supply.

“I saw what oversupply looks like, in Alice Springs in the 1990s, and we are nowhere near that point on Kangaroo Island, just the opposite.”

“Wholesalers are telling us they would love to send people here but it is too hard to get accommodation for groups,” Mr Drummond said.

“There is a huge demand and KI is now the fourth most recognised Australian destination for overseas travellers, behind Sydney, the Gold Coast and Uluru.”