The Carmel River Inn was built in 1934. The land changed hands several times since 1839 but was owned by the Hatton family in 1904. After Kate Harney Hatton's death in 1922, the land of William Hatton was fairly divided amongst his heirs.

Dr. Martin McAulay, husband of Dr. Sarah Hatton McAulay, was the owner of Hatton Lands (now Carmel River Inn). After the death of Sarah in 1922, Dr McAulay remarried. His second wife was Irene Winslow. In 1934, McAulay invited his brother-in-law, Orville Jones, from Southern California to help him develop a small motor court on the old Hatton property adjacent to the Carmel River Bridge. Jones was a plumber and worked with his two sons, Orville B Jones, Jr., and Kenneth L. Jones in constructing the original group of about 14 cabins on the site. After Dr. McAulays death in 1944, the Jones family continued to operate the facility.The original name was Rio Carmelo Motor Court. From 1941 to 1962, 10 additional cottages (some duplexes) were added and, in 1960, a two-storey motel building with 19 rooms was constructed.

An Italian restaurant named Domenici's was operated onsite from 1965 to 1974. You can still see the wine bottles that they stuck in the side of the levy behind what is now the housekeeping department.