Peter Taylor, doyen of Scotland's hotel trade, has "no regrets at all" about devoting the past six years to what must at one point have felt like a mad gamble.

As the economy tottered in 2008, was Glasgow really ready for the marble floors, killer crystal chandelier and £1500-a-night suites of its first-ever five-star hotel, in a stunning recreation of the halcyon years of the former Royal Scottish Auto Club in Blythswood Square?

What was he to tell the bank after a wall collapse during construction? Then in 2010, which firm could be relied on to complete the work after the collapse of his main contractor, and how long would the insurance claim for the wall take to settle?

"It was a difficult time," says the hotelier, who is rarely without a smile. "Understandably, the bank was getting concerned, mainly about when we were going to open."

He recalls: "Others in the industry had looked at the building and couldn't get it to stack up."

But nearly two years in, the Blythswood Square Hotel has truly arrived. "We get a lot of big names, we don't talk about them much but we do. It has become a focal point for people to do business – just like the RSAC was, way back then."

The hotel is more than 80% full, and proudly reveals that it has served 120,000 cocktails since opening (who's counting?) "We knew what we always wanted it to be," Mr Taylor says.

"Yes, it's five-star but not stuffy and formal. The people in the West love to get dressed up and go out and it has become – I had better not say the 'in-place' because that can go out again, but it has. So holding my nerve was the important thing, not being prepared to compromise on the final product."

That meant hunting down a pair of antique marble tables originally in the RSAC entrance-hall – "and of course the owner of the shop in Edinburgh knew who I was, and I had to pay a few thousand".

Then there was the 9000 square metres of Harris Tweed for the interiors – the biggest design order since QE2. It meant building far fewer new rooms than proposed by earlier would-be developers. "It would have been a rabbit-warren," Mr Taylor says. "We needed 70 new-build rooms to make it stack up financially."

His Town House Company lost £3.6 million in 2010 but only £350,000 last year, it owes the bank £26m and its finance cost was £1m more than its operating profit in 2011, the accounts revealed this week.

He has restructured the group into two hotel subsidiaries under a holding company, prepared a major insurance claim over the wall, and sold off three of his four Edinburgh hotels – all of which left him with a one-off £507,000 bill, suggesting real profit is not far away.

Mr Taylor insists the sale was not forced, though it has cut debt by £10m. It has also enabled refurbishment at his surviving Edinburgh hotel, the Bonham, this year's boutique hotel of the year in the Scottish hotel awards. The bank has been "very supportive... so far", he smiles.

The hotelier made his name in Glasgow, as manager at 1970s' rock star haunt the Albany, and went on to work for the Thistle and Stakis groups before buying and transforming the Lundin Links hotel in Fife. He founded his own company in 1989, assembled the Town House Collection in the 1990s and in 2001 received the silver thistle award for the most outstanding contribution to the development of tourism in Scotland.

Asked about where he stays when he goes away, the 68-year-old admits: "I still enjoy camping." He also is happy in a Premier Inn, when there has been no time to book ahead. But the talk soon turns back to Blythswood.

"My wife and I stayed there just a week ago, it was a last-minute decision, we just wanted to experience it. We had a brilliant time and I almost forgot I was in my own hotel – as long as my wife made me sit facing the window rather than the room and the restaurant."

Peter Taylor has long been involved in industry issues at top level, and represents business tourism, food, drink and retail on the Scottish Tourism Alliance. He says in today's climate the survivors will be "budget or boutique", with the squeeze on lifestyle businesses, particularly in rural areas.

"They will be under pressure I believe, but there are many others that have continued to reinvest in their properties and have a strong management team, that are doing well." He says the industry is coalescing, on the model of Scotland's food and drink sector. "It is about the industry taking ownership of its future, rather than having a sort of blame culture that some public sector organisation is holding it back."

In business, he values initiative and innovation. "I encourage people to just get and do things, and if they make the odd mistake it is not an issue (he smiles) as long as it is not an expensive mistake. What delights me more than anything is to see something amazing that has happened with absolutely no input from me."

Town House did have ambitions for Aberdeen, but these are on hold. "We are pausing to take stock, there is still work to do in Blythswood Square.

"Our approach has always been opportunistic rather than 'we are going to conquer the world with hotels in every city'. There may be opportunities that come along but we are not chasing them."

He concludes: "I have never looked back since we first went out on our own – I love this because it's such a landmark building, I would have had no interest in creating a 100-bedroom new-build hotel, it was the challenge to make something out of very little, as it was at the time.

"It has certainly been the most challenging thing I've done and in many respects the most enjoyable – with the odd dark moment."