The seaside hotel in Torquay that inspired John Cleese to create the beloved British sitcom Fawlty Towers is being demolished to make way for retirement homes.

Cleese, co-writer of the television series, stayed at the hotel in 1971 when he was in the area filming Monty Python’s Flying Circus. He and other members of the comedy team were booked into the hotel and were amazed at the chilly greeting they received from their hosts, Donald Sinclair and his wife, Beatrice.

The other Pythons moved to another hotel but Cleese stayed on and later used the Sinclairs as templates for Basil and Sybil Fawlty. He once described Sinclair as “the most wonderfully rude man I have ever met”.

Donald Sinclair died in 1981 and the hotel changed hands. In recent years it ran Fawlty Towers-themed events and attracted a steady stream of fans from across the world who stayed there or posed for pictures outside. Beatrice Sinclair died in 2010, aged 95.

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The 41-bedroom hotel closed last year and the site is being developed by Churchill Retirement Living, which has been granted permission to build 32 retirement flats on the site.

In its description of the development, the company says Torquay in Devon boasts a “busy harbour and an international marina that could fool you into thinking you were on the Mediterranean”. It does not mention the site’s place in British comedy history.

There was a sense of melancholy in and around Torquay as the demolition teams moved in. Ray Johnson, 57, from Paignton in Devon, said: “I’m a huge fan of Fawlty Towers and am really sad to see the old Gleneagles building go. My wife and I would often visit the hotel to meet up with friends for coffee. We used to enjoy looking at the Fawlty Towers memorabilia in the reception area. It’s another piece of local history that will soon be gone forever.”

Nicola Hearn, from Torquay, said: “The town is known around the world because of Fawlty Towers. It all started with the Gleneagles hotel. It was a local landmark and I knew people that worked there after Mr Sinclair sold it. So it is sad to see it finally demolished – it’s the end of an era.”

Over the years, those involved in the hotel reacted to its fame – or notoriety – in different ways. Beatrice Sinclair always tried to distance herself from the Cleese connection, once blaming the Pythons rather than her husband. “They didn’t fit into a family hotel,” she said. “They kept annoying my husband and were quite insulting.”

Facebook Twitter Pinterest An enraged Basil Fawlty attacks his car with a branch. Photograph: BBC Picture Archive

When the hotel was renovated in 2006, the new owners embraced the connection, inviting Prunella Scales, who played Sybil Fawlty, as guest of honour. She arrived in a replica of the red Austin 1100 that Basil thrashed with a branch in one of the sitcom’s most famous scenes. It was the first time she had visited – the show was shot in Thames Valley and the opening exterior shots are of the Wooburn Grange country club in Buckinghamshire. It was badly damaged by fire in 1991 – and also demolished.

The English Riveria Tourism Company has shifted its focus to Agatha Christie’s connections with the area. However it does have a section dedicated to Fawlty Towers on its website, in which it says Python Terry Gilliam was told off by the real-life Basil for using his knife and fork incorrectly.

Speaking last year to the local paper, the Herald Express, Cleese said he had long had an affinity with Devon. He used to visit with a school friend and they would play crazy golf and watch Torquay United.

“There is something really rather exotic about Torquay, with the palm trees – the English Riviera as Basil referred to it once,” Cleese said. “There is something comical about dumping this horrendous little English hotel in slightly swell surroundings.”

Members of the Python team have recalled their time at Gleneagles. Eric Idle returned to the hotel to find his bag had been removed and hidden behind a distant wall in the garden. Donald Sinclair apparently told him they thought it might be a bomb. Idle asked: “Why would anyone want to bomb your hotel?” To which the hotelier replied: “We’ve had a lot of staff problems lately.”

Michael Palin recalled that Donald Sinclair “seemed to view us as a colossal inconvenience”, while his wife threatened them with a bill for a stay of two weeks even though they had checked out quickly. “But off we went with lighter hearts,” Palin added.