According to the Daily Echo, some 34 staff are now at risk of redundancy.
The hotel is subsidised by local charity Macmillan Caring Locally and largely relied upon donations, which have been impacted by the Covid-19 pandemic.
Neal Williams, trust secretary for the charity, told the Daily Echo: “Many of the staff have worked with us since The Grove opened in 2011, and some worked for us before that when we owned the Albany Lodge Hotel in Southbourne.
“This is an incredibly difficult time for the charity and we are in a position whereby we now have to look at reducing our costs to ensure that we can sustain our core services going forward.”
He added: “It would be very difficult, and expensive, for us to make changes to The Grove to enable it to accept guests under the current guidelines and this would, inevitably, have a significant impact on other areas of our operation.
“As a result of this, a formal proposal has been made to permanently close the premises and make all employees who work there redundant.”