Fire has destroyed an historic hotel in the South Okanagan community of Oliver, B.C., and Councillor Jack Bennest says the loss will leave a large hole in heart of the town.

The fire broke out at around 7 a.m. Sunday at the Mesa Hotel on Main Street. Officials say the blaze broke out at the hotel's Rumour Mill Bar and Grill before quickly spreading throughout the three-storey structure.

The top floor of the building collapsed before noon, and Fire Chief Dave Janzen ordered bulldozers to demolish the rest of the hotel due to public safety concerns.

"The hotel is probably the size of three normal storefronts, so it's a fairly sizeable chunk of the block," Bennest said.

Neighbouring buildings, including the O.K. Photo Lab to the south and a little-used historic building to the north, appear to have sustained smoke damage.

Fire crews from Osoyoos and Okanagan Falls were called to help battle the blaze. No injuries have been reported, and the cause has not been determined.

The hotel was originally built in New Westminster in 1912 before being shipped by rail and reconstructed in Oliver in the 1920s. It was renamed the Mesa about ten years ago, Bennest said, but locals will always remember it for its former name: The Oliver Hotel.

Bennest said the town would have to "move quickly to come up with an interim plan" for the lot to avoid leaving a gap in town that could remain empty for years.

"The Three Gables Hotel burned down in Penticton at least 15 years ago and has never been replaced," he said. "Matters of insurance and stuff lingered for years."