It was built in 1879 by George Alderson Smith as a private residence, and was later converted to a hotel.

[1] On 4 June 1993, 55 metres (180 ft) of the 70 metres (230 ft) hotel garden had disappeared from view, the beginning of a landslide[2] which gradually became more severe, and finally on 5 June 1993, after a day of heavy rain, parts of the building collapsed, making news around the world.

The hotel's chimney stack collapsed live on television just as Yorkshire TV's Calendar regional news programme went on air covering the building's precarious condition.

[4][5] In 1997, the hotel's collapse became the subject of a significant court case in English civil law (Holbeck Hall Hotel Ltd v Scarborough BC[6]) when the owners of the hotel attempted to sue Scarborough Borough Council for damages, alleging that as owners of the shoreline they had not taken any practical measures at all to prevent the landslip – from soft, to hard engineering, nothing was done.

Reasonable foreseeability is a requirement for liability in negligence and nuisance in English and Welsh tort law.