The original Waverley Hotel was a temperance hotel, built with a 65ft frontage beside the Esplanade Hotel on the sea front. It was one of a chain of such hotels, others being in Barrow, Whitehaven and Penrith.
Gradually, over ten years, the Waverley Hotel swallowed up the neighbouring houses and adjoining vacant land. A pamphlet issued by management in the early 1920s described the Waverley as one of the largest and most up to date private residential hotels on the north east coast. It had, at that time, about 150 bedrooms and its own heated garage.
In the late 1930s the hotel obtained a license to sell alcohol and about the same time changed its name to the Rex Hotel.
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