But city officials said they have seen a resurgence of illegal hotels or guest houses with questionable fire safety standards in parts of the heritage enclave. In recent years, officials have closed down many of the illegal hotels.

"Yes, we know that new ones are emerging again," Mayor Yew Tung Seang said.

Several new guest houses have been built, especially in Stewart Lane and Love Lane.

Some replaced guest houses that were shut down when the Penang Island City Council (MBPP) went on a crackdown last year.

In 2014, the state government issued temporary licences to the guest houses and small hotels that began sprouting all over the heritage enclave. The purpose was to allow the businesses to operate while their operators worked on fulfilling all the requirements for permanent licences.

Fuelled by booming tourist arrivals, these start-up hoteliers created chic and trendy accommodations in pre-war houses but some did not have the financial means to comply with regulations such as fire safety and heritage conservation.

There were over 260 unlicensed hotels and guest houses then.

Read also: George Town: From ghost town to UNESCO world heritage

In November 2017, the grace period ended and MBPP came down hard on all those who failed to comply with by-laws for a hotel licence.

Enforcers then raided several hotels and tore down cramped rooms with sledgehammers.

Datuk Yew said hoteliers should know that they must have the proper licences.

"The requirements they must fulfil are to ensure the safety of guests and smooth running of the city. If everyone does whatever he wants in the heritage enclave, we will have a mess," he said.

It is understood that MBPP is awaiting instructions from the state government following the recent crackdown on illegal hotels.

In the meantime, Mr Yew urged new hoteliers to submit their licence applications to MBPP.

"The sooner you come, the more time you have to work on compliance before we begin enforcement," he said.

To get their licences, hoteliers must convert the premises from residential to commercial status. This requires planning permission and it costs tens of thousands of ringgit to draw up the building plans.

The owner of a new hotel in Stewart Lane, who did not want to be identified, said she did not fully agree with the rules.

She said she rented a pre-war house for her hotel. "It was a closed-down hotel, so the rooms are all ready. I have been in the hotel line for many years. This is my passion. We are dedicated to ensuring the safety of our guests and I feel that the requirements from MBPP are too stringent," she told The Star.

"How can you expect us to have concrete flooring on the top floor when this is a pre-war house? Guests want to live in an old place like this, which has wooden flooring. Some of the regulations don't make sense," she added.

She said that if she were to carry out the renovations to comply with the rules, the landlord would not pay for it.

"Some of the requirements need major renovations to the building. If I do it and the landlord ends my tenancy, I won't get compensation," she said.