The foundation stone was laid by Sir Henry Parkes in 1889, and the opening of the new establishment was performed two years later by Sarah Bernhardt, whose name was first in the new hotel's register, subsequently displayed in a glass showcase in the main foyer. The Sydney Morning Herald reported "French actress Sarah Bernhardt arrived in Sydney, bringing with her 100 pieces of luggage. As hundreds of fans flooded onto Redfern railway platform as her train approached, she was whisked away from the platform to the Australia Hotel where hundreds more excited fans wanted to catch a glimpse of the glamorous celebrity.
The opening ceremony marked an important milestone when Sir Henry Parkes laid the foundation stone in 1889, followed by a grand opening two years later performed by the renowned actress Sarah Bernhardt. Her name initially appeared on the hotel's records and was later showcased in a glass display case in the main reception area. The Sydney Morning Herald reported that Sarah Bernhardt arrived in Sydney with her luggage and was greeted by hundreds of fans at Redfern railway station.