Originally known as Observation City, the hotel was constructed in the 1980s by Bond Corporation to accommodate visitors for the 1987 America's Cup, which was held off the coast of Perth.

Council approved the proposal as a concept plan in May 1982, but the development did not proceed because Austmark had not acquired all the land required.

[9] Due to the desire for the hotel's completion before the 1987 America's Cup, Bond Corporation wanted to speed up the development's approval.

Bond Corporation property manager Bruce Buckley said in a letter to the mayor of Stirling in February 1984 that "we have set ourselves a difficult task in scheduling to have this project completed by late 1986 and we can only make this time frame by way of receiving positive Council support in all aspects in the shortest possible time.

The Planning Department recommended that council approve the development, subject to numerous conditions, which were described as "onerous" by the WA Inc royal commission report.

[12] Voting in favour were councillors Cash, Strickland, Tyzack, Grierson, McNamara, Satchell, Venville, Hancock, Anderson, and Britton.

[14] In the early 1990s, the Royal Commission into Commercial Activities of Government and Other Matters investigated allegations of bribery during the approval of the hotel.

In 1987, former premier of Western Australia Ray O'Connor falsely told Labor MP Terry Burke that he had bribed City of Stirling councillors on behalf of Bond Corporation to approve the hotel's development application.

[24][25] Celebrities to have stayed at Observation City include Michael Jackson, Bono, and Kylie Minogue.

[24] Straits announced in March 2009 that the proposal had been put on hold due to the Global Financial Crisis, with Straits Trading Company President Norman Ip saying that "due to the current economic environment, it is not an ideal time to launch a luxury apartment project of this scale".