FIRE caused about $25,000 damage at Birregurra's Royal Mail Hotel early this morning.
It is believed a lit cigarette butt was emptied from an ash tray into a bin, which smoldered for a couple of hours before sparking the blaze inside the hotel.
The alarm was raised about 3am and three Colac district Country Fire Authority units attended.
The fire continues a run of bad luck for the hotel after a a 54-year-old man died during March 2010 when an employee was overcome by a gas leak.
Paramedics performed CPR after the man collapsed while working in the cellar, but he could not be revived and was pronounced dead at the scene.
More to come.