Hamilton City Council is selling its stake in the city's Novotel and Ibis hotels to help pay off its debts.
The council owns just over 41% of the two hotels. Tainui Group holds another 41%, and the rest is owned by the international hotel chain Accor.
Tainui and Accor now have 60 days to decide whether they will buy the council's stake. If they don't, then the sale will be opened to the public.
The council won't say how much the hotels are worth, but it says it will only sell if it gets the right price.
Hamilton City Council has debts of $398 million, and reducing it is a major goal.
The council's two previous attempts in the past two years to sell its stake were unsuccessful.
