[2] A desire to increase tourism and reduce dependence upon fishing, prompted local business and political leaders[3] to form a company, capitalized at $1 million, that promoted the erection of a large hotel.

[4] Five years later, the Government of Newfoundland gifted the land, and guaranteed the $450,000 first mortgage that partly financed the undertaking.

[6] However, construction costs were double the estimates,[3] and the contractor ceased business after completion, and liens likely left the owner out of pocket.

[9] That year, the Canadian Marconi Company operated a radio studio and transmitter at the hotel,[10] called VOS.

[12] Experiencing low occupancy and burdensome capital debt,[3] the hotel defaulted on mortgage payments.

[15] Acquiring VONF, the Broadcasting Corporation of Newfoundland (BCN) maintained a studio and headquarters on the sixth floor 1939–1949.

[6] Within six months of Confederation, and in accordance with the specific terms of that agreement, the federal government of Canada became obligated to take possession of the loss-making hotel.

[5] A decade later, the small rooms, dated bathrooms, and poorly planned spaces, needed a prohibitive capital investment.

The 312-room hotel, with a glazed atrium resting upon a tetrahedron space frame,[3][6] was built adjacent to, and east of, the earlier building.