Ian Eldred, chairman of Rhyl Business Group (RBG), wants The Grange Hotel, on East Parade, to be rebuilt.

The building, which will be remembered by readers as a venue for weddings and birthdays, and by theatregoers as a place where they would often see cast members performing at the nearby The Pavilion Theatre enjoying a drink, was gutted by fire.

Twelve fire appliances and 80 firefighters battled to bring the blaze, which was reported shortly before 10pm, under control.

Fire crews pulled a 45-year-old homeless man to safety, who hinted that three other people were inside the property when it caught fire.

He was admitted to Glan Clwyd Hospital in a “critical condition” but is understood this week to be helping investigators establish what happened and provide information to rescuers hoping to search the property.

Mr Eldred said: “It’s so sad to hear of what has happened to The Grange. It will be remembered fondly by many people. Obviously it is too damaged to remain in its current form but myself and the business community would like to see a hotel reinstated on that site. From a business point of view we have a lack of good quality bedspace in Rhyl.”

The fear now is that the site, which was closed and put up for sale last November, will become an eyesore on Rhyl’s redeveloped East Parade.

Mr Eldred said: “I know we have the hotel element of Modus’ Ocean Plaza development coming soon but there’s certainly scope for more hotels in the 2* to 4* range.

“A quality mid-range hotel is needed and there is certainly demand from the local business sector for it.”

Rescue efforts are expected to continue all this week with specially trained sniffer dogs being brought in to help with the search for possible victims.

The condition of the building and poor weather conditions have delayed progress but now demolition work on four of the building’s exposed chimney stacks has made the site safer for rescuers.

Sgt Dave Evans, of Rhyl’s Neighbourhood Policing Team, revealed he had received reports of a number of the town’s homeless population using The Grange as a squat since its closure.

He said: “Worryingly there were reports that candles had been seen in the premises and it was feared that if action was not taken we could have damage caused by fire, injuries or even worse.”

Members of the neighbourhood Policing Team together with representatives from North Wales Fire and Rescue visited the premises and evicted five people. The owner of the property, who lives in the Midlands, was contacted and arranged for a local caretaker to secure the premises.