By agreement with the Department of the Interior, the building was to serve a single season and was to be demolished in August 1886, when construction was to start on a permanent hotel.

"[2] The hotel compensated for its unattractive appearance by offering a high standard of comfort and service.

Reamer, assisted by Charles A. Popkin, incorporated the old hotel into the new design, but changed its character completely to a long, horizontal structure that flowed along the hillside, anchored by a heavy hipped roof accented by prominent hipped dormers.

The new hotel comprised 400 rooms with 100 baths, and measured 750 feet (230 m) in length making it the largest building ever built in Yellowstone.

[5] The hotel showed clear influences of Frank Lloyd Wright's Prairie School with its horizontal lines and dominating roof.

One feature of the program was the de-emphasis of park hotels, which were built with railroad-borne tourists in mind, in favor of motel-style accommodations that catered specifically to visitors arriving in automobiles.

The all-new community to the east of the hotel included a visitor center, shopping, service station and amphitheater.

[14] In 1958 Garrison noted that a portion of the hotel was beyond repair, with uncorrected foundation issues dating to the 1891 building.

After some debate about the possibility of moving some portions of the hotel to Lake, the Carlos Construction Company of Cody, Wyoming was awarded the demolition contract for a $25 bid.

[16] On August 17, 1959, the 1959 Hebgen Lake earthquake hit Yellowstone, damaging facilities throughout the park.

While the quake has been cited as a rationale for the hotel's demolition,[17][18] it is clear that the decision to demolish had already been made and implemented.