Constructed between 1923 and 1924 on Fayetteville Street and named after Sir Walter Raleigh, the hotel was nicknamed North Carolina's "third house of government", due to its location and being a focal point for state political activity until the 1960s.

The Capital Construction Company was formed in 1923 to build a hotel in Raleigh to attract convention traffic that had been going to Greensboro and Durham.

The hotel became the unofficial headquarters of the North Carolina Democratic Party, at the time the dominant political force in the state.

[3] During the 1960s, suburban motel development, the completion of the new state Legislative Building, and general downtown decline affected the hotel's business.

By 1975, as downtown Raleigh decayed and demand for hotel rooms plummeted, the majority of the building had been converted to offices for the North Carolina Department of Transportation and other businesses.

[13] It was sold again on January 2, 2019, for $16.8 million to Capital Realty Group,[14] which announced plans to renovate the structure but continue using it as senior housing.