When Duke Ernst Günther purchased the area in 1651 and built the first palace, distinguished guests began to come to the town. Initially the guests stayed in the palace, but there came the time there was insufficient space, so the duke made sure that an inn was built next to the palace with access via Storegade and Slotsallé.

Ducal driver Marcus Nielsen was the first tenant of the inn around 1750. His son became “stud master” at Frederiksborg Castle, and his daughter married Christian Friedrich Gude, who later took over the lease.

Over time, the place has had many prominent guests, such as Hans Christian Andersen and General Christian Julius de Meza, who was Commander-in-Chief of the Danish Army. During a visit of the Duchess’s family from Gisselfeld Castle, the kitchen received a note from the chief of court with an order for “Dinner for eight people” for Monday, August 27, 1827. The menu consisted of seven dishes with four different kinds of wine followed by a classy rum ice cream dessert. This required ice from the ice cellar in the palace garden.

In 1835, the name of the innkeeper was Carl Wilhelm Würst. His father was Princely Pastry Chef Georg Wilhelm Würst, whom the duke had “hand-picked” in Berlin.

When the ducal family fled in 1848, the Danish state took over their possessions and thus also the inn. In 1854, the state sold off the estate, and the inn was put up for auction. The auction, which had been advertised in the Danish newspapers, took place at the inn.

Christian August Jørgensen was the bidder who submitted the winning bid and he changed the name to “Augustenborg Hotel”. He built a hall and expanded the place, now in private hands. When Jørgensen’s daughter married Jens Peter Christensen Frost, the name was changed to “Frost’s Hotel”.

In 1927, the hotel was owned by Louise Marie Frost, who was married to Mayor Hans Peter Zimmermann. She changed the name to the Palace Hotel (Slotshotellet) and ran it until 1960.

Until the local village hall was built in 1936, the hotel was the only hall with a stage in Augustenborg and was the centre of parties and activities in the town. Carnivals, comedy sketches, revues and cinema performances were held. And there were family parties and various performances, exhibitions, Christmas parties for children and dance school.

In 1965, the complex was 874 square meters, which included a restaurant, shop, large hall with stage, private residence with garage, two adjoining buildings as well as a nine and ten-pin bowling alley.

In the summer, people could enjoy the large beautiful garden with fountain and goldfish.

In 1987, the hotel was purchased by the municipality and gave the housing association Søbo permission to establish homes for the elderly. Since 1989, the name has been “Hofgården”.

The Palace Hotel is listed for preservation by the municipality and has been a cultural site for almost 300 years. Some of the basic parts of the building were made from very old building materials that allegedly originate from the first Augustenborg Palace. Under the ceiling in the covered alley towards Storegade, some of these old building materials can be seen.