After a wooden predecessor was dynamited to create a fire break during the 1896 fires, this three-story, red brick hotel with sandstone trim and a frame porch was erected as a replacement. Above the storefronts the eighteen-room hotel has round-topped windows and a bracketed metal cornice.
The Palace had been boarded up for several years when the Lays family bought it for $55,000 and reopened it in 1977. The hotel houses a restaurant, a casino (1993), summer vaudeville, and, according to one of the owners, a ghost—a feminine apparition believed to be Kitty Chambers, owner of the hotel from 1908 to 1918, who died in room 3.