In 1885 the E&O Hotel started off as a 30-bedroom lodging house, with a dining room with 12 tables. Over time the hotel was altered to accommodate new facilities. In 1907, the main block was demolished to allow for a two-storey guest room wing, a new sea wall, a dining room, a dance floor and a bar. At its height in 1923, E&O Hotel, fondly called as the Premier Hotel East of Suez, was known as the largest and best hotel in Penang, as well as the hotel in Penang with the longest seafront.

In 1995, after an extensive 5-year restoration work, the hotel was re-opened as a luxury heritage hotel. In keeping the original Victorian styled model guest rooms of the early 1900s, all guest rooms enjoy the sea view, afforded with en-suite bathrooms fitted with claw footed long baths with freestanding plumbing, pedestal ceramic basins, ceiling fans and private balconies. The new interior is based on a modern interpretation of East meets West with furnishing elements entwining harmoniously in a classical setting.