The hotel, which opened in August 2003, operates as a franchise of the Just Hotels group, and is regularly used by Dundee City Council to decant council residents on a temporary basis.

Mr Ellison said the local authority was informed at the earliest opportunity and they assisted the council to make the move for residents as swift and hassle free as possible.

However, the city council said their decant residents were given no prior notice of the closure, saying they were “forced to leave”.

A spokeswoman for the council said the closure was a “major inconvenience” and the housing department had faced a race against time to find alternative accommodation for their residents. Fortunately, all decant residents were found other accommodation.

The spokeswoman admitted the closure limits the council’s options for decanting people.

“We contacted the people that were our guests. We informed Dundee City Council as soon as we knew that we were to close so that they could make other arrangements for the people they had staying in the hotel. No one was left homeless and no one was left out on the street.

“Taxis were ordered and people were given drinks while they waited and the children were given crisps. The last person to go was helped out with their bags.

“We did everything we could to ensure people were helped.

“We then notified the suppliers so they could arrange to collect any equipment they had here.”

Mr Ellison said he was informed on Wednesday that the hotel was to cease trading and at 9 am yesterday was contacted by the bank and solicitor that the hotel was to close with immediate effect.

The hotel in Dundee is the only one in the chain to close.

Mr Ellison would not confirm whether the closure was due to financial problems and would only say that he believed there were a number of factors involved in the decision to wind up the business.

London-based businessman Ian Fraser and business partner Robert Robertson bought the hotel under the banner Just Hotels.

The pair had a 20-year lease on the hotel as well as a 20-year franchise commitment with Days Inn, who were keen to extend their operations in the Tayside area.