Completed in 1906, the Grand Hotel was designed to provide the finest accommodation in Palmerston North. It was built on the corner of Church Street and the Square in central Palmerston North and was the second hotel to occupy the site.

In the late nineteenth-century the site was owned by Joseph Poulter Leary, the instigator of the Manawatu Times. Leary's relative, Richard Leary, built a chemist shop on the site in 1877. As Palmerston North continued to expand, the demand for accommodation for travellers increased and in 1888 the shop was demolished to make way for a new hotel. The 'Provincial Hotel' was completed the following year and leased to boardinghouse keeper Martin Creaven. Creaven purchased the hotel in 1896 but, just ten years later, fire engulfed the wooden structure and it burned to the ground. Determined to construct a grand new building in its place, Creaven hired renowned Christchurch architect Joseph Clarkson Maddison (1850-1923) to design a new hotel for the site.

Maddison began designing buildings in Christchurch in the late 1870s. Although best known as a designer of abbatoirs and freezing works, Maddison's close association with the City of Christchurch Licensing Committee produced numerous commissions to design hotels. By the turn of the century he had acquired a nationwide reputation as a specialist in Italian architecture. In 1906 he designed a number of hotels to accommodate the crowds who flocked to Christchurch for the New Zealand International Exhibition and it was shortly after this that he was commissioned to complete the Grand Hotel.

Maddison's design for the Grand Hotel is an excellent example of the Second Empire style, which developed in France during the reconstruction of Paris by Emperor Napoleon III in the late nineteenth century. The Grand Hotel incorporates circular dormer windows and the mansard roof typical of Second Empire architecture. The close association of the style with Classical architecture is apparent in the Grand Hotel's rusticated masonry and its use of columns, pediments and entablatures. The four-storey building was designed to accommodate 66 bedrooms, two conservatories, a large dining room and a shop on the ground floor.

The foundation stone for the building was laid in 1906 by Martin Creaven, whom Maddison presented with a silver trowel in memory of the occasion. The building was erected by the building company Trevor Bros. Two years later Creaven found himself in financial difficulties and sold the building to James Trevor, a partner in Trevor Bros. In 1927, when the building was acquired by Edmund Lionel Barnes, it was selected to accommodate royal visitors to New Zealand, the Duke and Duchess of York.

When Queen Elizabeth II and the Duke of Edinburgh visited New Zealand for the first time twenty-six years later in 1953, the Grand Hotel was selected to house the royal visitors. The Queen was accommodated on the first floor of the building. Large, adoring crowds gathered in the Square below to catch a glimpse of her when she set foot on the small balcony next to her room. The following year the Queen travelled to Christchurch where she was accommodated in another of Maddison's buildings, the Clarendon Hotel (1902).

The fortunes of the Grand Hotel declined in the early 1960s. The tower that had dominated the roof of the building was removed in 1963. In 1972 the hotel lost its license and it was closed down later that year. The upper storeys of the building were gradually converted into offices while the ground floor became retail space. The sole reminder on the original interior of the building is the imposing, timber staircase inside what was the main entrance to the hotel.

The Grand Hotel has national historical significance. Used as accommodation for Queen Elizabeth II, the first reigning monarch to visit New Zealand, the building has a strong association with the public memory of the Royal Tour of 1953 -1954. As such, the building is a significant reminder of this important event in the country's history. The building is also architecturally noteworthy as an excellent example of the Second Empire style and a notable example of the work of prominent New Zealand architect Joseph Clarkson Maddison. The Grand Hotel is a landmark in central city Palmerston North and is held in high esteem by the public.