Fairfax Media also understands investigators will examine whether outstanding debt to a contractor was a motivation for the fire at the York Street hotel on Monday morning.

The fire is the latest in a spate of arson attacks in the bayside area. Late last year, St Kilda foreshore restaurant Republica was hit by arsonists twice in a month.

The heritage-listed hotel at the centre of the latest blaze was once home to the Motel nightclub and was due to reopen as The Albion rooftop bar and lounge next Friday to coincide with the Spring Racing carnival.

The establishment was a joint venture between Swan, former AFL player Luke Darcy's brother Matthew, Mark Armstrong and former Melbourne Storm stars Robbie Kearns and Danny Williams.

Fire broke out shortly after a foreman had opened up the premises at 6.30am on Monday and found himself face to face with two balaclava-clad men on the stairwell to the first floor.

"As soon as he confronted them and realised they were present in the building he was assaulted immediately," Acting Detective Senior Sergeant Dave Cox said.

Senior Sergeant Cox said the victim was punched in the face, leaving him dazed. He said the foreman recovered and, realising the pub had been set alight, escaped out the front door as smoke and flames began to engulf the premises.

A labourer was second on the scene, having turned up for work at 6.45am, and said he found the foreman coming out the front door with a bloodied face and fierce flames behind him.

By that stage, the masked men had fled. The foreman was released from hospital on Monday after being treated for minor injuries.

Senior Sergeant Cox said it was too early in the investigation to identify what was behind the attack.

"We're keeping an open mind as to the information coming in. We'll reassess that and take our direction from there."

When asked if any threats had been issued recently to those connected to the hotel, he said there were a "number of inquiries" taking place.

"Specific threats or anything like that are subject to ongoing police investigation. We'll continue to keep an open mind ... we're not discounting anything," he said.

It is not yet clear what the damage will be or if the exterior of the hotel can be saved. The hotel is subject to a Port Phillip Council heritage overlay.

The property is owned by Shapro Investments Pty Ltd. Speaking from Cyprus, Shapro director and property part-owner George Shapanis said he was aware of the fire, and was disappointed for the Swan and Darcy group. Mr Shapanis said it was not yet clear if the building would have to be demolished.

Fire spread through all three levels of the building, and though most of the damage was confined to the hotel, one wall of a neighbouring building had been affected.

An $80,000 sound system had been installed only last week.

Port Phillip mayor Amanda Stevens said the council's municipal building surveyor issued an emergency order on Monday morning, which means entry points will be boarded- p and a safety fence installed.

Ben Vague, a long-time friend of Swan's who lists himself as a part-owner of The Albion on social media, wrote of his devastation at learning of the fire.

"Don't think you could wake up to anymore shattering news!" Vague wrote on Facebook.

Friends posted messages of support for Vague and his business partners. "Get around the lads! So much dedication went into that place by the whole team," one wrote.

It is understood Swan is overseas and is not due to return home until Thursday for the club's best and fairest on Friday night. The Albion was his first nightclub venture.

"I've never been involved in something like this and the opportunity came up with the right people," Swan told News Corp earlier this year.

"I've got a tattoo shop and a clothing shop. It's good for life after footy – I'm a lot closer to the end."

It is not the first suspicious blaze to strike an entertainment venue in Melbourne's inner bayside suburbs in the past year.

St Kilda foreshore nightspot Republica was the target of two firebomb attacks in late 2014 that were believed to be linked to outlaw motorcycle gangs.

The popular summer spot on Jacka Boulevard was first firebombed on November 13 after instituting a "no colours" policy that bans bikies from wearing gang symbols inside the venue.

They had also recently refused entry to former Bandidos sergeant-at-arms Toby Mitchell, who was believed to have been an early suspect in the investigation.

Republica was struck again on December 11, 2014, when two men wearing white hooded overalls smashed a door at the rear of the venue shortly before 4am.

Fairfax Media understands the Port Melbourne-based Mongols, senior members of which enjoy close ties with Mitchell, were investigated over this blaze.

No one has been arrested over the Republica fires.

Mitchell, who is n custody on drug trafficking charges, owns the City of Ink tattoo studio in Clarendon Street that is just 350 metres from the Albion.

Mitchell last year posted a photograph of himself with Swan to his Instagram account with the caption "Having lunch with Collingwood champ Dane Swan". Collingwood's media manager said the photo was the result of a chance encounter and that Swan did not know the high-profile ex-bikie and contacted the club to tell them after the photo was taken.

It had come shortly after Swan drew criticism for attending a $200-a-head charity function linked to underworld identity Mick Gatto.