The hotel is believed to have been built in the 1860s. It was originally a much smaller building than you see today with probably only 5 or 6 bedrooms. The Bar was constructed around 1911, primarily to cater for the people involved in the herring industry. There are photos on the walls of the hotel which show the bay completely filled with fishing boats.
The MacLeod family bought the hotel in the 1930s and 3 generations ran the place until it was sold to Terry and Irina Mackay in December 2006. The MacLeods added the restaurant wing and the extra wings to the side and back of the hotel to increase the accommodation space.
The Mackays have created the MacNeil room as the premier accommodation and converted 2 rooms to make the Vatersay Room. In addition, significant sums have been spent on upgrading rooms, the kitchen, the restuarant and the Castlebay Bar.