The Stuart Hotel in East Kilbride is owned by Glasgow-based G1 Group.
In 2007 bosses announced plans to transform the hotel into a multi-million pound attraction in the town centre.
Then, in September 2009, the company – which owns The Corinthian and The Grosvenor in Glasgow – was granted permission to build a multi-million pound hotel with bar, club and restaurant on the site in the South Lanarkshire town.
The hotel was left boarded up for years, prompting concerns from residents, who said it had become a "rat-infested eyesore" and a "blot on the landscape".
Last week building standards officers from South Lanarkshire Council served G1 with a Dangerous Building Notice after an inspection of the old hotel.
The company was urged to repair the crumbling foundations or demolish the building
Bulldozers were then called in and demolition work – which has resulted in the emergency closure of two roads in the area – could last until February 25.
One local, Jim Paton, contacted the Evening Times to express his concerns.
He said: "A once-beautiful hotel was left to decay until it was unfit to be of use."
Linda Fabiani, MSP for East Kilbride, has now called for urgent action to develop the prominent site.
She said: "Like many residents in East Kilbride, I was sad to see the once-vibrant Stuart Hotel torn down.
"Given the amount of investment going into the East Kilbride Shopping Centre, it is imperative something is done quickly with this site, which is the first thing visitors to our town centre see."
No one from the G1 Group was available to comment on plans for the Stuart Hotel site.
But a spokesman for the company previously told the Evening Times that G1 was "fully committed" to it.
A council spokeswoman said: "Following an inspection on January 30, the Building Standards Service issued on the owner a Dangerous Building Notice.
"The terms of the notice required the reinstatement of the structural integrity of the building or the demolition.
"The G1 Group agreed to the terms of the notice, in relation to the demolition of the building, and instructed CEP Demolitions to begin work on January 31.
"To ensure safety when the work was taking place, roads and transportation services put in place two emergency road closures – in Cornwall Way and Cornwall Street – between January 31 and February 25, with alternative routes in place."