Development costs had risen from an initial £1.5m for refurbishment ot £6.5m for a complete rebuild. The property will be put back on the market shortly.
Stein bought the 44-bedroom Rocklands hotel last May for about £600,000. He has already spent a further £280,000 gutting the building ready for demolition.The plan was to link the new hotel and restaurant to a café on Tolcarne Beach below via a cliff railway.
Stein added: 'I'm very depressed and feel that I've let everyone down. At the end of the day I've got a very successful business in Padstow and I need to protect it.'
