The history of the Gaiety is connected to that of the Bijou Theatre at 217-223 Bourke Street, which began as the Academy of Music in 1876, set at the very rear of the site, accessed via the Victoria Arcade.
Renamed the Bijou in 1880,[1][2] it was bought in 1880 by John Alfred Wilson (c1833-1915), who had made a fortune in gold mining, and had a wide range of business interests.
[3] In 1888-9 Wilson bought the adjacent site and built the Palace Hotel, with a large dining room at ground level, both accessed from the Victoria Arcade.
[4] In 1890 the Bijou was destroyed by fire, and immediately rebuilt to a larger scale, and at the same time the Palace Hotel dining room was refitted as a theatre, called the Gaiety.
After a succession of lessees,[5] in 1915 the freehold of the Palace Hotel and Gaiety, along with the lease of the Bijou, was bought by theatrical entrepreneur Ben Fuller.