Welcome to the Hotel California, you can check it out any time, but you won't be pleased

But the black shadecloth and expensive address cannot hide the bombsite that is the former California Hotel.

No guests have been welcomed at this hotel in Hawthorn for quite some time just vandals, graffitists and the homeless.

Closed in 2008 not long after the Pratt family's investment company Thorney Holdings bought the site at 138 Barkers Road, the hotel site has descended into a rubble reminiscent of an urban war scene. The sign at the entrance says, "California Hotel Hawthorn, great welcome, great value" but there is nothing welcoming about the site.

Guttering and old light fittings dangle from buildings littered with smashed windows and graffiti.

Residents and the Boroondara Council are concerned the site has become a magnet for antisocial behaviour police reportedly made a drug bust in the shadows of the hotel in December.

The building next door, with a different owner, is also derelict and littered with smashed windows, many covered with metal sheets.

Thorney Holdings chief operating officer Alan Miller said the future of the California Hotel site was uncertain. "We are speaking to people at the moment because it has been on the market and other people have approached us with regard to perhaps looking at the site in conjunction with us, so we are just considering our options at the moment," he said.

The company has owned the hotel since 2007 and the site has a planning permit issued in 2010 for redevelopment as a four-level retirement village with 87 apartments.

Mr Miller said security had been an issue at the site and the company was considering clearing the former hotel buildings.

"We have had ongoing police visits there initially we had security surveillance it's a very difficult scenario where you have got a building awaiting demolition for the site redevelopment. It's challenging, we have certainly been in discussions with the council about it," he said.

"We do ongoing clearing of the site of debris and cutting the grass and I guess some of the more superficial things like that, but in terms of removal of the buildings etc, we are currently considering all that as well."

Boroondara Council mayor Heinz Kreutz said the council had received many complaints about the site and held discussions with the owners to clean it up. "Not everyone is as responsive as they should be," he said.

Some Melbourne councils have introduced escalating rates for derelict sites to encourage redevelopment.

Cr Kreutz said punitive rates could be something Boroondara considered.

"It is a good suggestion and the next step," he said.