The Damson Dene started life as a farm built by Mr "Pont" Pearson at the turn of the 20th century. He had lost his previous home in a drunken bet and built New House to replace it.
Its use as a public building started when Miss Jennie Holme opened the buildings as a hostel for the CTC (Cyclists' Touring Club). She called it the Damson Dene. At first, it was just for men, but when women started turning up they had to have a dormitory, too. The bicycles were housed in a wooden hut and the shippon became a girls' dormitory.

The Youth Hostel Association took over from the CTC in the 1960's, water was laid on, mainly for the expanding caravan sites across the road. In 1970 the YHA were still using it. Mr and Mrs Kershaw ran the hostel and advertised ham and eggs, served in a wooden hut cafe.

In the 1970's it became a hotel and the buildings were gradually extended and joined together. An indoor swimming pool and leisure centre were built. For a time the hotel was owned by the Methodists Holiday Association and became famous for having a consecrated chapel and for being tea-total. When the demand for weddings grew, the hotel became thte first Methodist establishment to serve alcohol.

In 2000 it was bought by local hoteliers Jonathan Denby and Margaret Nicolson and forms part of the Lake District hotel chain, South Lakes Hotels. The modest farmhouse has grown into a 37 bedroom, 3 star hotel and leisure centre.