Li Ka-shing's showpiece Harbour Plaza Metropolis in Hung Hom may face legal sanctions.
Lands Department officials say a huge function suite outdoors on the seventh floor may be an illegal structure.
The hotel had two illegally built fabric canvases that spread above more than 3,000 sq ft of a balcony garden, a Chinese-language newspaper reported yesterday.
The Patio, as the venue is called, was marketed as a place to host wedding banquets and conferences. It had air conditioning and curtains, spotlights, fans and chandeliers, the newspaper said.
Offering a splendid view of Victoria Harbour, it can accommodate up to 25 banquet tables and about 300 guests.
However, no fire sprinklers were visible, implying a possible fire risk, it said. The balcony originally comprised only an outdoor garden without any built-in structures, a plan of the hotel obtained from the Buildings Department shows.
Li's Cheung Kong (Holdings) built the hotel in 2002. The two canvases, one circular and the other L-shaped, are believed to have been put up as early as 2004.
If the structures are confirmed to be illegal, the billionaire's showpiece would have exceeded the floor area permitted by the land lease by about 285 square metres.
A spokeswoman for the Lands Department said yesterday that initial checks suggested the temporary structures at the balcony were illegal.
The department was taking legal advice and if it confirmed the structure had breached the land lease, it would take appropriate follow-up action, she said.
The Buildings Department said it was investigating.
A spokeswoman for the Harbour Plaza Metropolis said the hotel had stopped accepting banquet bookings for The Patio because of planned renovation work starting next March.
She said the hotel had been in contact with various government departments since April on the issue of the canvases.
She declined to comment on whether the hotel was trying to meet the legal requirements to keep the canvases or to negotiate on the terms of the lease.