Hannigan Hotels is now seeking planning permission to demolish the Cladhan Hotel, on Kemper Avenue, and replace it with 36 flats.
Owner Douglas Hannigan said that the company had taken the decision because they believe that the future demand for accommodation will be far lower.
The hotel relies on organised bus groups coming from countries including Holland, Germany, England, Ireland, America and China.
Its other main customers are people working away from home.
Mr Hannigan said that as more people are working from home, these bookings are also expected to be lower in future.
He said: "We decided as a group to look at the possibility of 36 flats, as there is a need for more housing in Falkirk town centre area.
"The hotel will re-open but we are focusing on The Park Hotel first as it's our largest and best equipped hotel."