In 1792, about 100 years before the Hotel was built, local inventor Samuel Morey launched a small boat equipped with a steam engine on Lake Morey. Along its bow was a single paddle wheel to propel this craft. More commonly known as a steamboat, Mr. Morey invented his boat nearly 20 years before Robert Fulton's Clermont. Mr. Fulton took advantage of a loophole in the U.S. Patent Morey was issued, thereby receiving the recognition of becoming the first to invent the steamboat.

Still determined, Morey returned to his hometown of Orford and continued to experiment with various methods of power by combining water, carbon, and air. This led to his "Gas or Vapor" engine in 1826, becoming the first to invent the internal-combustion engine which later was used to propel most modes of mechanical transportation, including automobiles.

In 1905 the town of Fairlee "voted to allow Mr. George Kendall exemption from taxes for five years if he would build a hotel to cost at least $8,000." Construction of "Kaulin," the center portion of the main building began immediately. The original nine holes of the golf course, designed and laid out from 1900 to 1915, fit into the space we now use for the first six holes and the 18th. The Inn prospered, and the golf course became a big draw. In 1929 the original back nine holes were added to the course, and in 1989 the course was re-routed and updated to its current layout.

The Inn evolved over time as well, with an annex constructed to the main building, and many renovations and updates through the years under the watchful eyes of devoted owners. In 1947, Frank Ward purchased the Inn. Mr. Ward and his family set the tone of hospitality that was passed on to the Averys when they purchased the Inn in 1972. Prior to purchasing Lake Morey Resort, the Averys owned Bonnie Oaks in Fairlee and the Tavern Inn in Montpelier; but afterward, the Lake Morey Inn and Resort would become their focal point. The stewardship of the Inn passed first from Borden and Louise Avery to their son Allen. Allen passed it on to his sons Mark, the current general manager of the Lake Morey Resort, and Jeffrey, the current superintendent of the Lake Morey Country Club.