The floating hotel quickly proved to be economically unviable, attributed to frequent bad weather, its remote location, and a series of incidents that undermined public confidence.

[7] In the 1980s, Australian tour operators wished to further exploit the reef's tourism potential through making trips faster and shorter, or through creating off-shore accommodation for tourists.

[10][9] The planned island would have been placed in the John Brewer Reef—a shallow coral reef lagoon situated about 70 kilometres (43 miles) northeast of Townsville—and was to consist of three ocean cruise ships permanently placed on the sea bed, underwater walk tubes, and an artificial sand cay, altogether designed to support 3,000 guests.

[8] The company Barrief Reef Holdings Limited was established in the same year for the hotel and began to be listed in the stock exchanges of Australia and New Zealand in September.

[12] The final design was a seven-story structure,[1][5][7][13] capable of accommodating 356 guests in a total of 140 double rooms and 34 luxury suites.

[10] The hotel's projected 98 staff members[8] were assigned to live on the top floor, the least desirable part of the structure since it swung around the most during bad weather.

[2] In addition to the main structure, there were also adjacent floating pontoons that functioned as walkways and had moorings, as well as a swimming pool and tennis courts.

[8] Inside, the hotel had two restaurants, a nightclub, a disco, two bars, a sauna, a gym, a library, a research lab, a diving gear shop,[1][2][13] a 100-seat theater, and a 50-seat underwater observatory.

Barges brought in supplies weekly, and fresh fruit and vegetables were restocked through daily runs by boat and helicopter.

Located below the main deck, there was a steel-plated corridor through the hotel's "spine", with water-tight rooms that housed a desalination plant, three diesel generators, ballast tank controls, a repair shop, sewage-treatment machinery, and a large air-conditioning system.

[8] The gas produced through incineration of waste was emitted from a 24-metre (78 ft) high stack, which had been designed to not have an impact on the ecology or aesthetics of the John Brewer Reef.

[13] Although the floating hotel proved to be economically unviable, various analyses conducted in the John Brewer Reef during and after its operation demonstrated that its environmental impact had been successfully minimised.

[14] In a 1995 retrospective analysis, researchers Peter Saenger and Ian Dutton chiefly attributed this success to the designers having respected environmental management requirements, as well as to the comprehensive regulatory frameworks of the Great Barrier Reef.

[8] In July 1987, Reef Link II, a catamaran designed to carry 400 passengers to the hotel, caught fire off the coast of Magnetic Island.

[2][5] Two months after the hotel opened, an unrelated floating platform also installed in the John Brewer Reef, called "Fantasy Island", sank during a storm.

[8] In September, a large and previously unknown World War II ammunition dump was found just 5 kilometres (3 miles) from the hotel's location,[8] though it was determined to not pose any danger.

[2] In April 1989, the floating hotel was sold to the Japanese company EIE International, of which Barrier Reef Holdings became a subsidiary.

[16] Due to its direct access to the mainland, the floating hotel no longer suffered from a remote location or poor weather conditions.

[2][4][5][17] Despite charging high prices (US$300 per night), the Saigon Floating Hotel could report consistent occupancy rates of 80–100 % in its first four years of operation.

[17] In 1998, EIE International sold the Saigon Floating Hotel to the South Korean company Hyundai Asan for around US$18 million.

[2][4] The reason for purchasing the floating hotel was reportedly that it was cheaper and easier than initiating a brand new large-scale construction project.

Kim criticised many of the facilities in the region, including Hotel Haegumgang, and ordered that many of them be demolished, planning to redesign the area in a North Korean fashion.

[2][3][19] Numerous involved South Korean parties, including Hyundai Asan and the Ministry of Unification, sought to negotiate with North Korea following Kim's announcement, but requests for meetings were refused.

[2] In early February 2022, satellite imagery began to pick up on activity close to the Haegumgang Hotel and the structure was ultimately demolished around 5–6 March.