The top of the range four-wheel drives, fishing boats and campervans that line the suburbs of this Pilbara mining town prove the area isn't short of cash to invest in luxury.

But despite a $54-million arts precinct and a flash apartment complex in the CBD, tourists who visit Karratha, about 1,600 kilometres north of Perth, are limited to staying in caravan parks and motels.

Karratha is home to more than 24,000 people, many of whom work in the lucrative mining and resources sector.

In 2012, the WA government and the local council sought a developer to build a Hilton Hotel for visitors, but plans fell through when a negotiating window expired.

In 2018, the council announced it would contribute $10 million of its own money and proposed a 30-year lease to help a developer "fit out'"a $19.7 million, seven-storey complex.

But the impacts of COVID blew out construction costs far beyond the city's estimated spend, and once again the project has stalled.

A lack of accommodation during a recent conference forced some attendees into mining camps for their three-night stay.

"We just want accommodation," Karratha Mayor Daniel Scott said.

"That's not a good look for a city that's looking to aspire to being the city of the north."

Director of real estate consultancy Primary Advisory, Dylan Price, pointed to a long list of challenges that had emerged since the pandemic for accommodation providers.

"Getting materials here is more challenging, the code and the standard that you need to build to in these locations is higher again," he said.

"You add the cost of the land to the cost of a build, and often the cost to deliver that is more than what … the property is worth at completion."

Mining 'does crowd' tourism

An inquiry into fly-in fly-out (FIFO) workforce practices in regional Australia found the tourism industry competed directly with the resources industry for housing and labour, sapping any potential diversification and local economic growth.

WA Tourism Minister Rita Saffioti said the state was investing in improving the Pilbara as an attractive destination for tourists, like funding new hiking and cycle trails at Karijini National Park.

"One of the issues of course with Karratha, Port Hedland and the Pilbara is, its success very much is dependent on the mining industry," she said.

No luxury hotel

While the plot of land allocated for a luxury hotel in Karratha's CBD has sat vacant, other large-scale accommodation developments have continued to pop up around the city in the form of workers' camps.

The basic accommodation is tailored to resource-sector workers, mostly those who fly in and out of the region.

While they are often faster to build than a hotel and provide much-needed accommodation, workers' camps can also be divisive.

"The community, like the council, doesn't want to have a large FIFO population here" Mr Scott said.

"We know that there needs to be a certain number of FIFO beds available, particularly for shutdowns and maintenance programmes.

"However, we are still keen for our large companies to help build [permanent workforce] capacity in our local economy."

The City of Karratha is predicting a shortfall of about 4,000 beds for the incoming construction workforce by 2029.

It faces a conundrum as it tries to balance its goal to promote local living with making the most of the economic boom.

Council policy dictates workers' camps can be approved for no longer than 10 years and any proposed extension must show evidence of demand.

High-density hotel

Earlier this year, the city was asked to consider a $120 million hotel proposal in the suburb of Nickol.

Public submissions for the Bayview Hotel were overwhelmingly positive.

But several pointed to similarities in the design of The Landing Resort in Port Hedland, which is owned by the same company.

Karratha resident and Nationals candidate for the Pilbara Kieran Dart said the design for the Bayview Hotel, including the mess hall and laundry, was consistent with a high-density FIFO camp.

"The density of this accommodation is much higher than a lot of the other camps in the Karratha region, including Kingfisher and Searipple," he said.

"It suggests they're being booked by large industry and rooms are only made available to the public when one falls through."

An objection on behalf of a local mining camp, Searipple Village, argued it was only at 60 per cent capacity and any new workforce-targeted development would create an oversupply.

The city attempted to have the 928-bed development reclassified as "workforce accommodation" — which would limit its life span — and to improve the look of the design.

Those efforts were unsuccessful and the development was given the green light by the Development Assessment Panel, with a minor scale back to 832 rooms.

Mr Price said he was also aware of large-scale developments branded as "resorts" cropping up in other mining towns around the country.

But he acknowledged beggars couldn't be choosers.

"Particularly in Karratha, there is such a shortfall of that accommodation, it does still deliver additional supply which is very constrained in a location like this," he said.