A planning application has been submitted to flatten the Seacourt Hotel in South Marine Drive and replace it with a new building which would have eight flats over four storeys.
The statement urging councillors to approve the scheme claims that the opening of the Marston's Hotel at the Lobster Pot and the new Premier Inn have killed off trade for the Seacourt, despite its prime location with sea views.
It says that trying to sell the business would be almost impossible and that the flats project is the most viable.
The statement says: "Anne Mountain purchased the property in May 1992 as a vacant building. It had previously been used as a holiday home for the Ladies Section of the British Legion.
"The building was in a poor condition and Mrs Mountain invested a considerable amount of money in totally renovating the property to form a 12-room hotel. A function room was added to the rear of the property in 1993.
"The hotel proved to be popular and represented a successful business for the first 10 years. The building was regularly updated and maintained."
However, it adds that things started to change in 2002 when the popularity of the British seaside holiday declined and in recent years, things have nose-dived.
"There has been a sharp decline in business since 2015," the statement adds.
"More recently the opening of the Marstons Pub/Hotel in 2016 and the Premier Inn in Easter 2018 have contributed to the demise of Seacourt Hotel. 2018 represented the most unsuccessful year of trading whilst the Premier Inn was full for the majority of the year.
"In March of 2019, the Seacourt Hotel had no bookings at all for the Easter period."
The new building would have eight two-bedroom apartments and parking for 10 cars.