Hope that there might be a room - measuring 3 metres by 4 metres - to call their own.

This is Reid's Guest House.

Once one of the most opulent buildings in Lydiard Street North, it is now owned by UnitingCare.

Recently accredited two-and-a-half stars, the hotel has 12 double rooms catering to low budget tourists and backpackers.

But it is the 60 long-term rooms and its inhabitants that form the raison d'être for the place's existence.

UnitingCare chief executive Cliff Barclay says they bought the sprawling property in 2003 to provide a place for those who found themselves in a real estate cul-de-sac.

"The guest house is for people who are just down on their luck - whether on a rental blacklist, straight out of prison, on bail or on welfare," Mr Barclay says.

"They are able to come in here and rent it on a fortnightly basis."

Some of the rooms, he says, are very small.

"There is not much here, apart from a bed," Mr Barclay says.

"(But) it is one of the few places they can afford to stay."

Reid's Guest House manager Robert Brown says for many, the hotel is all that stands between them and the streets.

"It is a home to a lot of people," Mr Brown says.

"It is somewhere they have got.

"If we shut the doors tomorrow you will have 60 people on the streets with nowhere to live."

Yet, despite having a no drugs and no alcohol policy, catering to the lower end of the market can sometime have an unsavoury side effect.

"A lot of people in Ballarat walk past and think it is derelict place ... a drug den. In the past, there have been calls to shut it down.

"You can do that - shut us down - and the problem is gone, except the problem is not gone.

"The problem is in your backyard and on the street corner and in the alleyway."

It was somewhere in the alleyway, or more precisely, the loading dock of a supermarket, that Kurt Usher found himself about nine years ago.

The Brisbane resident had come to Ballarat lured by the promise of factory work.

But things didn't go as planned and the then 25-year-old found himself on the streets on a cold winter night.

"I'd run out of money, I needed to get clothes, I needed somewhere to stay," Mr Usher says.

"I just got stuck."

Battling mental illness, the loss of his girlfriend and miles from the warmth of family and friends, Mr Usher says he was in a bad place.

"I couldn't get the wheels in motion," he says.

"I got here (Reid's Guest House) and it sort of went okay and, from that point, I didn't worry too much."

Eight years later and crammed with his meagre belongings, the room with a window overlooking the busy city streetscape has become a haven.

"It suits me," Mr Usher says.

"I have got all my worldly possessions the way I like them."

Yet, he says, not everyone shares his enthusiasm for the guest house.

"Some people will sit there whinging and carrying on and saying the rules make it like a prison," Mr Usher says.

"No, it doesn't.

"It is comfortable, homey, safe and you are not on the streets.

"Sure, it's not the Hilton, or anything, but I can afford it."

Built by John Reid at the height of the gold rush, the Reid Hotel, it seems, was quite the Hilton in 1886.

The budget accommodation, Mr Barclay says, represents a significant era in the architecture of Victoria.

"The whole building was built with the best in mind," he says.

"The woodwork and the fittings reflect the opulence of the late 1800s."

It is also one of Victoria's last "coffee palaces" of the temperance movement, promoting reduced intake of alcoholic beverages.

"It was like a pub with no alcohol," Mr Barclay says.

An illegitimate son of a German nobleman, Mr Reid moved to Ballarat via New York, opening a bakery to feed the hard working gold prospectors.

A replica of the famous The New York Bakery is still churning out sumptuous meals at the Sovereign Hill.

But the original - though now unused - bakery oven is deep in the basement of the six-storey guest house.

"Reid made his money baking bread on open ovens," Mr Barclay says.

"He delivered the bread on a pony to

Blackwood, Daylesford, Creswick and did very well for himself."

Reid made enough, obviously, to deck out the coffee palace as one of the finest buildings in Ballarat.

Despite a slight air of decay, glimpses of its past grandeur can still be seen in the majestic carved timber staircase, the original hand painted ceiling murals and the colourful art

nouveau lead light windows.

"Reid spared no expense," Mr Barclay says.

"The venue was quite popular."People used to come off the trains and be impressed by the splendour.

"They came to stay in what was a very classy establishment."

However, keeping the prices low so that those "down on their luck" can access the hotel comes at a price.

The wealth has long disappeared.

UnitingCare, Mr Barclay says, is struggling now to break even.

"We are losing $20,000 to $30,000 a year," Mr Barclay says.

"We are not in it for the money here, we are not making a profit."

When Peter Williams split from his long term partner three weeks ago, even a room at the Reid's Guest House was a bit beyond his budget.

Until the 47-year-old received his disability payment, he found himself in what was called the Robert Clarke rooms, a crises accommodation wing of the hotel, more often than not funded by one of the welfare agencies in town.

Without Reid's, Mr Williams says he would have been spending Ballarat winter on the streets - a place he has been before.

"I have nowhere else to go," he says.

"If I didn't have this, I would probably be on the streets."

Now he has enough money for a small room, but Mr Williams is only at Reid's until he can fi nd a unit to rent, somewhere decent enough to bring his two daughters over for a visit.

"I don't understand how people can stay here forever," Mr Williams says.

"For me it is a transition place ... somewhere to get a reference from that I pay rent on time."

But even the rent from the long-term rooms, Mr Barclay says, is not enough to cover the costs of the hotel or the expensive repairs the heritage property requires.

"It is a wonderful lady, but it is starting to get a bit tired," he says.

"It is like the Sydney Harbour Bridge. We will always need to fi nd ways to repair it and maintain it."

Fortunately, the structure is as solid as the day it was built.

"Recently we received a big heritage grant to fix the front verandah," Mr Barclay says.

"We made it structurally sound, but we didn't have enough money to make it pretty as well.

"We really want to work hard at finding money to fi x the front facade, because it is actually letting the street down at the moment."

There is also talk about refurbishing the games room, or what passes for it, with its "crappy pool table".

"For a lot them, the room, and what's in them, is all they have," Mr Barclay says.

"We really need to provide something else for them. Something to make it more a more enjoyable place - a more happy place to live."

Just coming out of the depth of his mental illness, for Mr Usher the hotel is more than adequate for now.

"Three or four years ago I had a lot of trouble sleeping and I was getting mixed up in the head," he says.

Luckily the hotel manager saw him outside and realising something was wrong called the hospital.

When he returned, Mr Usher says, things felt different.

"Once I got back, there was a different sort of a feel about the place," he says.

"It wasn't like so much grandma's place, but it was a place I could call home."

The hotel staff, he says, looked out for him just like family and friends.

Mr Usher says one day in the future he will leave the hotel.

But while he takes steps to get back in the community and get well enough to work, he is staying put.

"The hotel has been good to me. I feel I am in a safe place," Mr Usher says.

"It has been a rock."

*Some names have been changed.