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1888 saw the arrival of the St. Andrews Land Company, a party of American businessmen operating largely out of Boston and Bangor, who saw in St. Andrews a watering place ripe for the making. Since the 1870's spillover traffic from crowded Maine resorts such as Mount Desert Island and Old Orchard Beach had been steadily increasing in the Passamaquoddy Bay area. In 1881 along 5 hotels spring up to meet the demand – 3 on Campobello Island and 2 in St. Andrews. A leading light in the group was Robert Gardiner of Newton, Massachusetts, who had been vacationing with his family at the Argyll Hotel at Indian point for some years and who had been encouraged in the idea that St. Andrews might be made premier vacation spot by Sir Leonard Tilley. The Land Company had wide-reaching goals. It wanted to create a cottage development at Indian Point, build a golf course and also a first-class summer hotel. Accordingly, the Algonquin Hotel was erected in the winter of 1888 and opened in June 1889 to great fanfare.The first Algonquin was a fairly rustic affair by continental standards though elegant enough for St. Andrews, at that time something of a backwater. There were four floors, with two bathrooms on each of the first three floors, none at all on the fourth, which was more or less the hotel equivalent of steerage. These bathrooms featured hot and cold salt water, as saltwater was still thought to be a curative for the ailing, and many "invalids" had been coming to the seaside for the last century to experience the power of salt air and salt water on the human system. A well behind the hotel called Sampson's spring provided "mineral water" for the table and also which was bottled and sold to guests to take back home with them.
The hotel advertised its healthfulness as a leading feature of its amenities. The town was noted in early advertising to be Hayfever free. Sewage was carried down one side of the hill to Katy's Cove, leaving hotel guests safe to bath in the waters near the blockhouse. No mention was made of the fact, however, that all the other town sewers emptied into this same shore. The first Algonquin featured rustic pleasures of a sort popular in places like Bar Harbour – Saturday night hops, buckboard rides to outlying areas such as Chamcook mountain, fishing expeditions with Indian guides, clambakes on neighbouring island, sailing. Many of the staff were brought to St. Andrews in the summer from Boston. A regular feature of summers at the Algonquin was a three-piece band usually of ladies from the Boston Conservatory of Music.
The hotel was wooden, and built in the Queen Anne style. The walls and massive verandah were covered entirely with shingles stained green, and the roof was colored red. A tennis court was erected alongside and the hotel was open for July and August only. Guests came from a variety of places – some were locals from Saint John and St. Stephen, of course, but the Land Company made a special pitch to New Englanders. As a part of the package it put together, no-change through train service was provided from Boston and surrounding area, also Montreal, with a running time of about 12 hours, a substantial improvement over earlier timetables.
In the early 1890's the Land Company built a golf course at Joe's Point on property that used to be largely farmland. It was one of the first golf courses in Canada and perhaps the first in the Maritimes. Golf itself became a major drawing card at the Algonquin.
The first Algonquin did well enough that the Land Company borrowed heavily of Sir Thomas Shaughnessy, then President of the Canadian Pacific Railway, to finance a large addition. Unfortunately, this loan was defaulted on in 1903 and the CPR took possession of all Land Company properties – not just the Algonquin itself, but the golf course, the Indian Point park which had never been completed, Katy's Cove, and various other properties which had been picked in early in 1888 when the Land Company was first being put together. The reign of the St. Andrews Land Company was over, though some of the executive, such as Robert Gardner, had built cottages near the Hotel and continued to vacation in St. Andrews.