Completed in December 1933, the Boulder Dam Hotel was built to house the large number of tourists who wanted to visit Boulder Dam, as Hoover Dam was called at the time. Thousands came to southern Nevada to observe the construction of the dam, often taking a train that ran directly from Los Angeles to Boulder City or driving up the Arrowhead Highway, later Highway 91. By the summer of 1933, it was clear that the town needed a hotel. City Manager Sims Ely issued a permit and lot lease to the owner of a local business, Paul Stewart Webb.

Webb and his partners built the two-story, white columned Dutch Colonial structure, complete with a wood-paneled lobby and private baths in all thirty-two rooms. The hotel's grand opening was an event unrivaled in southern Nevada history, as neighboring Las Vegas had nothing to compare with the Boulder Dam Hotel. The elegant establishment featured a modern heating and cooling system, and highway billboards boasted of the building's home-made weather, certain to attract tourists in a region where summer temperatures soared well into the triple digits. Within a year and a half, hotel owners had added forty-eight guest rooms and a dining room.

During its glory days, the Boulder Dam Hotel was visited by some of the most famous people of the time: actors Bette Davis, Shirley Temple, Harold Lloyd, Ronald Coleman, and Wallace Beery; millionaire Cornelius Vanderbilt, Jr.; photographer Margaret Bourke-White; writer Will Rogers; one of the richest men in the world, the Maharajah of Indore, India; and Cardinal Pacelli, who would become Pope Pius XII. Some celebrities, such as Boris Karloff, stayed there to establish residency for a Nevada divorce. Others, including Will Rogers, came to perform at the Boulder Theatre next door.

By 1941 the hotel's elegance had begun to wear and one guest said the building was dreary and smelled of dust. At the same time, Las Vegas's first resort hotel, the El Rancho Vegas, opened on what would become the famous Las Vegas Strip. The Boulder Dam Hotel would never again be considered a luxurious destination, yet it remained a serviceable lodging place. During World War II the hotel was filled with government officials, families of servicemen stationed at Camp Williston, and employees of Basic Magnesium Incorporated, located in nearby Basic Townsite (later Henderson). Housing shortages led to such a demand for accommodations that the hotel's dining room was turned into a dormitory, and guests slept on the lobby's sofas and staircase landings.

After the war, the explosive growth of the Las Vegas Strip attracted many of the visitors who came to southern Nevada, and the Boulder Dam Hotel suffered from diminished popularity. Over the next several decades a series of owners tried to revive the failing enterprise. Attempting to change the hotel's image, one owner renamed it the Colonial Inn. Another tried converting it to a rest home, the Boulder City Retirement Home. Despite these efforts, no one could turn the hotel into a profitable venture. Although it had been added to the National Register of Historic Places, the hotel had become a ramshackle rooming house by the early 1990s. It was shut down at least twice because of its deteriorating condition, and seemed destined for demolition.

Boulder City residents, however, were reluctant to lose the once-elegant symbol of their town's beginnings. They formed the nonprofit Boulder Dam Hotel Association and purchased the hotel in 1993. With funding from the state, the county, the city, and private donors, the structure was remodeled and reopened with twenty-two guest rooms. The restored hotel is now owned by the association, along with the Boulder City Arts Council, the Boulder City Chamber of Commerce, Boulder City Museum and Historical Association, and the city. In addition to the hotel, the building now houses the Boulder City and Boulder Dam Museum, a restaurant, and several shops and galleries.