The Palace Hotel in Babbacombe was chosen as an RAF Officers' Hospital due to its scenic location, easy access from the rail network, and the state of the local roads, which were deemed to be in a good enough condition for motorised ambulance transport.

[4][5] The hospital was opened in October 1939, with a complement of 249 beds, and a staff of 203 (11 officers, 87 nurses, 87 airmen, and the rest were civilian employees).

Battle-weary and fatigued personnel were assessed at the hospital under a new programme that had evolved since the First World War when those who had broken down were deemed to be suffering from shell shock.

[13] The necessity for rehabilitation was realised in 1940 when there was a shortage of experienced aircrew, and at Torquay, special attention was paid to physio and occupational therapy.

[15] At 11:00 am on 25 October 1942,[16] despite having a large red cross painted on the roof,[17] the hospital was attacked by four Focke-Wulf 190s, in what was described as a "Tip and Run" raid.

[18][19] A Tip and Run raid was where bombers would attack and strafe at low level, and then quickly return to their home airfields.