Building work has officially begun on a $68 million Rydges Hotel at Sydney Airport's international terminal.

The four star hotel, which is being built by construction firm Denwol Group, was announced in November and will have 317 rooms, as well as a bar, restaurant and a gym. It is due to open for business in 2013.

Kerrie Mather, CEO of Sydney Airport, said: "This hotel meets demand by international tourists as well as business travellers for convenient accommodation at Sydney Airport.

"The gateway will be welcoming two new international airlines - Air Asia X and Scoot - later this year and a new hotel at the international terminal enhances Sydney as a premier destination for inbound travel."

Last year, more than 11.6 million passengers flew to and from Sydney Airport's international terminal - an increase of 3% on the previous year, and "Rydges Hotel will be well-placed to cater to this growth," Mather added.