I like this idea but it would work much better as a shallow flat in order to take up less layout real estate. The iconic entrance sign would be better off if done by Miller as it was pretty elaborate with the lighting patterns. A two-story one would be better than the pictured three-story version unless one was doing a proper city with many high-rise buildings IMO.
Yes, in O, or even HO, so many buildings just do not fit on the majority of layouts. Which is sad, because many of us would love to have a hotel like this or any other mom-and-pop motel. I think any hotel/motel in O gauge would have to be an old urban one on the same footprint as the Woodland Scenics city buildings. Or possibly maybe a small ski lodge or B&B with multiple floors. Something that in real life has a small footprint.
Anything else would have to be a caricature of a hotel/motel in the Department 56/Lemax style.