Dearth in Venice as developer pulls plug on Grand Hôtel des Bains

It was one of the most elegant hotels in the world, the setting for Thomas Mann's Death in Venice and the residence of choice for Hollywood stars from Clark Gable to Keira Knightley. But Venice Lido's Grand Hôtel des Bains is no more after quietly closing its doors several months ago – to be reopened as a luxury apartment complex next year.

The news will upset cinephiles and art lovers the world over, and for ever change the face of the Venice film festival, which is held nearby.

Andrea Martini, film critic and professor of cinema theory at Siena University, who stayed at the hotel for 22 years in a row while covering the festival, is devastated by the news. "I always got room 422, one of the old rooms, still with parquet and art nouveau furniture, with a little terrace overlooking the sea. The bedsheets were in white linen; it was so worn out, you could see through it."

He is angry at the city for not doing more to preserve it. "I'm in mourning," he said. "It may look frivolous at first, but it is actually a very serious matter. Somebody at the Venice town hall is at fault for not preserving what is an international and historical treasure."

Its new owners say the hotel will be entirely renovated and restructured, and will open in late 2011 as the Des Bains residences, a complex of apartments, some for sale and some for rent.

Cristina Fossati, of Est Capital, the real estate fund that bought the hotel in 2008, says the renovation will benefit Venice and the lido: "Est Capital's Real Venice real estate fund is renovating the town's entire 2.2km sea promenade," she said.

The Hôtel des Bains is not the city's only historic public building to be transformed in this way. The huge old Al Mare hospital, as well as three palazzi in the centre of Venice, have been sold to Est Capital.

With an ever-shrinking population and fewer taxpayers, city authorities say they cannot afford to maintain their own historic buildings, let alone step in to rescue private ones. "The municipality chose not to intervene," said an employee from the mayor's office who asked not to be named. "The hotel has always been in private hands. At least the listed reception rooms will remain intact."

Director Stephen Frears, who stayed at the Des Bains in 2006 when he won the festival critics' prize for The Queen, said the sale represented the end of an era. "I'm only glad that Dirk Bogarde isn't alive to have seen this," he said.