Patrick Smyth sees the march of time changing Rathmullan, Co Donegal.

From Lough Swilly, the charming Donegal village of Rathmullan looks now the way it did 40 years ago. And were it not for the hideous concrete potato store on the seafront and the upgrading of the pier, an aged visitor arriving at the latter now could believe that little had changed in the 107 years since Jim Deeney's grandfather commissioned Lord Leitrim's English architect to design the Pier Hotel. But Rathmullan, looking up the lake to Buncrana, has changed. As 72-year-old Deeney hangs up his hat and closes the much-loved family hotel, he is also closing a chapter in the life of a transformed village whose own history, long associated with holidays, has for a century been mirrored in the hotel's own story.

Behind the facade of the old coastguard house, the orange-fronted hotel, the Martello Tower, and the fine, tall trees of Batt's Walk that line the village's long sandy northern beach, all is changed. In the last 20 years an extraordinary building spree of holiday homes in and around the quiet village has more than doubled its size, and the remorseless rise of self-catering holidays has finally put an end to the Pier Hotel, as it did to most of the two dozen guest houses the village once accommodated.

Deeney admits that even if his children had wanted to carry on the onerous hotel tradition, changing fashion and economics would have forced him to turn the hotel into holiday flats as its new Derry owner intends.

His great-grandfather bought the site in 1874, then an inn and posting house. Twenty years later the family built the present hotel to a design by an architect who happened to be staying while he completed work on the infamous Lord Leitrim's hotel in Rosapenna.

Then, as the landing point of the Fahan paddle boat ferry that connected Derry to its natural hinterland, Rathmullan was the hub of the Fanad peninsula and the access point to Milford and the whole of northern Donegal. Visitors and commercial travellers from Derry - only seven miles as the crow flies - would stay the night and pick up jarveys outside the hotel to continue their travels, while farmers heading in the opposite direction with pigs for market would leave their horses in its care.

During the first World War, with much of the British fleet at anchor in the lough, its commander, Admiral Jellicoe, had a suite in the hotel as a refuge from the pressures of HQ in Buncrana. And in the late 1920s, when disease threatened the Scottish herring stocks, the hotel flourished as the town became a central point for processing and shipping a new fleet's produce, much of it for Russia. During the second World War, the potato trade to Britain boomed.

Deeney says he remembers from that time the hotel's most notorious guest, Sir Oswald Moseley, but more for the latter's brand new red sports car than for anything the fascist leader - described by his own grandson Ivo, as a "ranting ethnic fanatic" - ever said.

The car killed off the ferry, and the sixties would see the commercial trade gradually supplanted by a growing and deeply loyal holiday trade which filled the hotel and its two latter-day upmarket rivals on the village's outskirts, Rathmullan House and Fort Royal.

At night, warmed by simple country hotel fare and many a pint, the sessions went on well beyond closing time. "They were guests, you know," says Deeney with a grin, still mindful of the licensing laws observed most in the breach. A liberal definition.

Year in and year out, the same families, largely from the North and Donegal's emigrant communities in Scotland, booked back in for the same two summer weeks. Deeney claims the hotel's business was 70 per cent repeat.

Children swam on the safe beaches - those were the days before Spanish holidays made many unwilling to brave the Atlantic cold - while parents fished, walked, or whiled away the hours with friends and family.

As the Troubles eased, surprising amounts of Northern money, much of it, the story goes, unknown to the taxman, fuelled the housing boom - many of the three hotels' customers and their offspring now have a permanent stake here.

And with the closure of the vilage's own Ballroom of Romance, "The Denver", Deeney built a function room on the back of the hotel and more than ever it became the centre of community social life.

Deeney and his wife Ann are still involved in local activities, from the development committee to the heritage committee.

To mark the closure, they threw a party for all of those who had worked in the hotel - 150 showed up, including 91-year-old Mrs Cissie Sweeney.

The next project? "Ah well," he says, "there's the 400th anniversary of the Flight of the Earls on September 14th, 2007".

The earls set off for France from here, and there is no way this is going to be a small party.