The Falcon was established in 1798 when, as a Lodging House, it provided accommodation for the Captains of the Merchant Vessels that were trading or taking shelter in Bude Haven. After the opening of the Bude Canal, the Lodging House became the Falcon Crest Inn and in 1826 was further extended to become the Falcon Hotel. These developments were made while under the patronage of Sir Thomas Dyke Acland who was one of the largest landowners in Bude at the time.

The Aclands were an ancient Devonshire family from Killerton near Exeter, and the Falcon was so named as a Falcon forms the crest of the Acland Family Coat of Arms. With the Canal Company Offices based in Exeter a regular Coach Service started. This service was extended in 1872 when the Hotel then became the headquarters for the transport system of this area.

Many famous people have stayed here in the past including Alfred Lord Tennyson who in 1848 broke his leg when he fell over the garden wall. He wrote several letters afterwards saying he knew of no better place in which to convalesce.