The fire started in the Wood Brothers general store and within minutes the place was ablaze. With the help of a strong southerly breeze, the fire spread to adjoining buildings and according to William H Bayley, author of Bluehaven: History of Kiama Municipality, "half the block of shops fronting Terralong Street from Collins Street towards Shoalhaven Street caught fire at 2am and was destroyed soon after dawn."

The Sydney Morning Herald dated Monday, October, 2 1899, reported: "By the time the local police and many others were on the spot, and under the direction of Senior-Sergeant Brayne, Alderman Hindmarsh and others, many willing hands made great efforts to prevent the flames catching the Royal Hotel. In spite of their efforts the hotel soon ignited.

"This building being in part lath and plaster outside blocked the advance of the fire for a time: but ultimately the fire got hold of the place, and being a two-storey wooden structure it soon became a burning maze belching out tongues of fire against the adjoining building."

Unfortunately there was no fire fighting equipment in Kiama at the time - hoses and tank water being the best on offer - so extinguishing the blaze became a huge problem. There are conflicting reports about how the fire was eventually stopped. No lives were lost but 12 families were left homeless, and 16 shops and the hotel were destroyed.

The total cost of the damage was estimated at between £5000 and £6000.