UPDATED, 12.38pm: The motel fire has been deemed suspicious. Victoria Police, along with the CFA, will investigate.
The fire broke out at Bullarto House Motel on Wednesday morning.
EARLIER: A motel just south east of Daylesford which is believed to be disused has been gutted in a fire, with ongoing concerns around asbestos.
Nine fire trucks were called to the vacant motel at Bullarto, on the Daylesford-Trentham Road, about 10.40am on Wednesday.
CFA District 15 Operations Manager Brett Boatman said the single-storey timber building was "fully involved" in the blaze, and firefighters believe the entire motel was vacant at the time.
"We had some concerns with a gas cylinder that exploded at the premises, but no-one was injured as firefighters were well away from it," he said.
No cause has been determined for the fire, with investigators heading to the Bullarto property this afternoon.
A hazmat truck from Lucas is currently en route to the motel, with concerns around possible asbestos and air quality.
The fire was declared under control at 11.20am, but Mr Boatman said "crews will be there for some time blacking the fire out."
Daylesford police have been called for traffic management along the Daylesford-Trentham Road.