In many ways PP it would be a delight to see the monstrosity removed. Clearly though, as the only hotel we have, it would be the final straw in the potential life of the village.
Linda, it has nothing to do with what was where first. The law is known as the Costas and dictates that anything built within (I think 100mtrs) of the coast, that restricts access to the coast which is the property of the State shouldn't be there and may well have to be removed. The vast majority of LG village itself cannot fall foul of the law since it is "inland". Whilst a lot of property had local authorisation, the argument is that said local authorisation was granted without reference to the Law of the land - hence the problems.
Apparently a fair few buildings in Playa La Arena are likely to be looked at though, including tourist accomodation blocks - that will be interesting!