An Aboriginal Australian family is taking its case to the Human Rights Commission amid claims they were denied entry to two western Sydney hotels partly due to their race.

The National Justice Project on Thursday said it filed a complaint to the commission on behalf of Raymond Davison and his family and friends, who allege the Bidwill Hotel and the Carousel Inn denied them entry in February.

They allege they were denied access "because, or at least partly because, they were a group of Aboriginal people".

Facebook/Nathan Dean Merritt

Mr Davison said they arrived at the Bidwill Hotel after attending a wake.

"We just wanted to get lunch at the hotel like anyone else, so to be turned away because of who we are was deeply hurtful and humiliating," he said in a statement on Thursday.

"We shouldn't have to put up with that sort of treatment, it just goes to show that racism is alive and well in our country and that is why we are making a stand."

Mr Davison claimed that riot police arrived when they questioned the hotel's decision and described the incident as "incredibly intimidating".

The complaint also alleged NSW Police overreacted to the situation.

National Justice Project chief executive George Newhouse said race-based discrimination was unacceptable in society.

AAP

The complaint seeks compensation, a public apology and the establishment of a reconciliation action plan at the hotel, the not-for-profit legal service said.

Video footage of the alleged incident was posted to Facebook by Nathan Dean Merritt who was among the group trying to enter the Bidwill Hotel.

"It's very SAD that we still have to put up with RACISM in this country ... No one was intoxicated just family trying to get together mourning the death of our lost one," he said in the post on February 22.

Bidwill Hotel licensee Marty Secheny told AAP on Thursday "there are two very different sides to this story".

Facebook/Marty Secheney

"There have been indigenous people and people of all races coming to this hotel for many, many years," he said.

NSW Police responded to calls that up to 100 people were refused entry at Bidwill Hotel.

However, upon arrival there was a crowd of about 30 to 50 people who were dispersed without incident, police said in a statement.

An investigation is ongoing.

The Carousel Inn said it was not in a position to comment.

A Human Rights Commission spokeswoman told AAP it could not comment on the matter.