The Royal Hotel is one of several notable examples of hotel architecture in Opotiki, reflecting the town's role as a major commercial centre in the eastern Bay of Plenty. Its appearance is largely the result of remodelling in the early 1900s, although it may incorporate parts of an earlier structure. A two-storey building was initially erected by 1880, located on a corner site on the town's main commercial thoroughfare. It was probably commissioned by Stewart Bates (?1846-1902), who went on to found the 'Opotiki Herald' newspaper. A comparatively large establishment, the hotel was initially run by John - or Big Jack - Parkinson (1849-1918), whose family supplied soft drinks to the locality from their cordial manufactory. It was constructed as colonial Opotiki recovered from an uncertain economic start to become an increasingly prosperous settlement. The first hotel provided accommodation as well as rooms for recreation and public gatherings, including meetings of the Opotiki Town District commissioners. The commissioners sought to improve roads, lighting, water and sanitation in the town between 1882 and 1911, and regulated the wharves and publicans' fees amongst other issues. They also occasionally met at the nearby Opotiki and Masonic Hotels.

The first timber structure was remodelled and enlarged in 1908-1909, soon after an extensive flood in the town. New plans provided for approximately 55 rooms, advertised as incorporating comfortable bedrooms and extensive public spaces. The refurbished hotel attracted residential clientele that included the well-known concert singer and composer Fanny Rose Howie (1868-1916), also known as Princess Te Rangi Pai. Te Rangi Pai had toured extensively throughout New Zealand and Great Britain, giving several recitals at the Royal Albert Hall. She was the granddaughter of Tamati Tama-i-whakanehua-i-te-rangi, who had signed the Treaty of Waitangi (1840) as a prominent member of Ngati Porou.

The remodelled structure was designed by the architect T.H. White, who lived in Opotiki at the time. Built of timber and concrete, the building incorporated a square porch on Church Street and an open balcony with union jack balustrading. Its appearance differed considerably from the earlier hotel, which had a return verandah and roofed balcony along both the Church and King Street facades as well as a corner entrance. These modifications encouraged less public lingering of its clientele outside the building, and can be partly linked to the strength of prohibition sentiment in the early 1900s. Votes for prohibition in national referendums peaked in 1908, when a majority cast in favour but failed to gain the three-fifths majority required to ban the sale of liquor. The hotel also included outbuildings such as a horse stable, which was described by its publican in 1913 as 'first class'.

The hotel narrowly missed destruction by fire when several adjacent buildings burned down, also in 1913. The building was however reduced in size in the 1950s, after being purchased by Consolidated Hotels Limited. Alterations included the demolition of numerous residential rooms, and their replacement with a concrete bar extension fronting King Street. Catering for motor vehicles rather than horses, detached motel units were added to the rear in 1968, while a drive-in bottle store was added in 1989. The building still functions as a bar, although not as a hotel.

The Royal Hotel is one of a valuable group of historic hotels in Opotiki, which demonstrate the changing style of provincial establishments in the early twentieth century. It has connections with individuals of regional and national importance, such as Te Rangi Pai and the architect T. H. White. The building has played an important role in the social life of the community for more than a century, and is still in use for much of its original function. It is linked to varied aspects of provincial New Zealand life, such as recreation and civic administration in a pioneer town. Occupying a prominent position on the main commercial thoroughfare in Opotiki, the Royal Hotel has significant streetscape values, while elements of its visual appearance can be linked to the impact of the prohibition movement. It is part of a broader historical and archaeological landscape in the urban centre dating to the late nineteenth and early twentieth centuries, which includes other historic buildings such as the nearby Rostgard's Building, Masonic Hotel and Opotiki Hotel.