The Palace Hotel is a functionalist-style hotel with Art Deco detailing. It is believed to be the first concrete hotel in Mackay with a fully cantilevered veranda, demonstrating the high degree of technical skill in Mackay at the time. The veranda roof also cantilevers, with concealed structure in both directions.

The first hotel on the site dates to 1884 and was a two-story timber building known first as the Bobby Burns, then the Oxford Arms Hotel before becoming the Palace Hotel in 1905. The new building y in 1939 using bricks from the local Pindi brickworks. The publican, Fred Lehfeldt, opened the new Palace Hotel in December 1939.

The original public bar had a 46 ft frontage to Victoria Street and a 26 ft frontage to Sydney Street was a striking example of the modern trend in bar room construction in the late 1930s. A semi-island bar of unusual length made for the greatest comfort of patrons eliminating crowding as much as possible and making possible the speediest of service.