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The original building on the site was a simple, single-storey structure with open verandah to the street, inhabited by a Dutch Governor. In 1837 it was converted into barracks for the British Army. In 1873 it was converted into a hostelry, with reconstruction commencing on 23 February and completing 27 October, the same year.
The task of converting the Army hostel into a hotel was undertaken by the then Governor Sir Robert Wilmot-Horton, engaging the architect of Public Works Department, J. G. Smither, who was also responsible for the National Museum of Colombo, Colombo General Hospital and the old Colombo Town Hall. The estimated cost to build the hotel was 2,007 pounds but is noteworthy that the hotel was constructed within one year under the estimate for only 1,868 pounds.
The Grand Oriental Hotel was officially opened on 5 November 1875, and had 154 luxury and semi-luxury rooms. The owners were Colombo Hotels Company Ltd, who advertised it to potential customers with the claim that it was "the only fully European owned and fully equipped hotel in the East" and "managed by experienced Europeans".
“The Grand Oriental Hotel (or GOH as it is familiarly known far and wide) was the first of the modern type of imposing hotels erected in the East. With its towering front facing the harbour and the shipping and its main portico separated by only a few yards from the principle landing stage, it occupies both a commanding and convenient position; and passengers by the mail steamers who are passing through the port are especially catered for at this establishment in the very best style…The building contains 154 bedrooms…The hotel is lighted throughout by electricity and all the public rooms and bedrooms are kept cool by means of electric fans.”