Property developers are planning to turn the Gleneagles Hotel in Torquay into retirement homes, reported Guardian online.
Funnyman John Cleese came up with the idea for his hit TV comedy series while staying there in 1971.
He based his Basil Fawlty character on former owner Donald Sinclair, who he once called "the most wonderfully rude man I have ever met".
Sinclair's family sold the hotel after his death in 1981 and the place finally closed for business last year.