By the 1920s, the Ilfracombe Hotel was more than 50 years old and badly needed refurbishment. in 1928, the local authority had decided to try to buy out the owners, the Ilfracombe Hotel and Esplanade Company but their offer was turned down. Instead the Council took a lease on part of the hotel, its tennis courts, swimming pool and part of its promenade and refurbished that part of the building as Council Offices. In 1932, they also took over separate buildings, which formerly housed the hotel's laundry, to house a new museum for the town. The end of an era was heralded by the outbreak of War in 1939 when the hotel (which had continued to run on a greatly reduced scale during its last few years of life) was requisitioned by The Royal Army Pay Corps who took over every inch of space for offices and accommodation for their staff and used the tennis court as a parade ground.
When the Pay Corps finally left after the war, the Council spent three years discussing what to do with what had become a white elephant. In 1950 they let the building to a brewery who renamed it "The Holiday Inn" and used just the lower floors for cheap accommodation with bars on the ground floor. the upper floors remained unoccupied and completely neglected so that ultimately, dereliction set in. When the brewery relinquished its lease, a survey revealed that the entire building was desperately in need of a complete and expensive refurbishment. The town was divided between those who were sentimentally attached to a famous Victorian landmark now over 100 years old and those who saw a different future for its site - there was even a public enquiry. In the end , it had to go and in the autumn of 1976, bulldozers rumbled onto the site to commence their work.