The Pavilion Hotel was built in 1822 by William Forsyth, a prominent and aggressive businessman whose father, James, had received a Crown Grant of 388 acres of land fronting the Niagara River at the crest of the Horseshoe Falls. He ran a stage coach along the Portage Road, and was the first person to establish a row-boat ferry service across the Lower Niagara River. The Pavilion Hotel was situated just north of Dunn Street, on the East side of the Portage Road (present day Main Street). For many years after its construction, the Pavilion Hotel was considered to be the grandest hotel in the vicinity of the Falls, and from its balconies, visitors could obtain one of the finest views of the Falls and rapids.
In the earliest surveys of the land by the Falls, 66 feet of land (one chain) bordering the Falls and along the entire river was reserved by the government for military purposes. In an attempt to control the tourist business, Forsyth built a high rail fence around the reserved land which bordered his property. This fence effectively restricted free access to the Falls, as tourists had to pass through Forsyth's property to reach the Military Reserve. A petition of complaint from fellow hotel owners, whose guests could no longer view the Falls from the reservation land, was sent to Sir Peregrine Maitland, Lieutenant Governor and commander of the military forces of Upper Canada. He authorized a group of soldiers, under the command of Captain Phillpotts, to take down Forsyth's fence, which they did on May 18, 1827. Forsyth rebuilt his fence, but it was again torn down. Forsyth undertook civil action against the Crown, to receive compensation for the damages done to his property. By 1832, however, discouraged by the lengthy and costly proceedings, Forsyth sold his 407 acre property for $15,000 to the Niagara Falls Company, a consortium of prominent men, including Thomas Clark and Samuel Street, who implemented the City of the Falls Project. Forsyth then moved to the Township of Bertie (now part of Fort Erie).
After Forsyth sold his hotel, the Pavilion came to be known as Forsyth's Hotel. It remained the most popular hotel in Niagara Falls, until the construction of the first Clifton in 1833. The coming of the steam railroad in 1837 reduced the number of guests who came to the Pavilion via the Portage Road. The hotel was destroyed by fire in 1839, and although it was rebuilt, it never regained the popularity which it had enjoyed under Forsyth's management. Sometime in the early 1850's, the second Pavilion Hotel was also destroyed by fire, and not rebuilt. A stone cairn commemorating the Hotels, located at the junction of Oakes Drive and Portage, was unveiled by the Lundy's Lane Historical Society on May 6, 1935.