To put everything in perspective:

   Cedar Key is located on a small barrier reef on the Gulf side off the Florida coastline, directly west of Ocala. Cedar Key occupied a critical location during the Civil War, where blockade-runners exported cotton and lumber and imported food and other supplies to the Confederacy. A hurricane all but destroyed the small town in 1896.
   The Island Hotel is one of Florida's most famous "bed and breakfasts" and is listed on the National Register of Historic Places. The building was constructed in 1859 and is built from seashell tabby with oak supports. The walls are almost 12 inches thick and have withstood countless storms and hurricanes. The hotel has "settled" and its sloping floors have survived the passage of time, many guests, and several feet of water every time a storm blew the roof away. The building was originally built as a general store and post office. Very little has changed it over the years. A small bar was added on the ground floor and was painted with murals of Cedar Key in 1945. A large picture of King Neptune and his court is prominently displayed over the bar, hence the name "King Neptune Lounge". 
   Major Parsons built the structure and named it "Parson and Hale's General Store". At the same time, Cedar Key began to expand. During the Civil War, Union soldiers burned down almost every building in Cedar Key except the general store. They used the hotel as officer quarters and as a warehouse. Just before the end of the Civil  War, the Confederacy "retook" the town and officers of the Southern Army were billeted in the Hotel. 
   After the war, the general store was reopened, serving as a customs house and headquarters for the Cedar Key post office. John Muir noted the general store in his journal while trekking from Kentucky to Cedar Key. Sometime in the 1880's the building functioned as a restaurant and boardinghouse, with President Grover Cleveland once spending the night at Parson and Hale's.
   In 1896 a major hurricane severely damaged the town and the store. Soon after, Francis Hale, one of the original owners, died. In 1914 Langdon Parsons, a relative of John Adams, sold the building to Simon Feinberg, who turned the building into the "Bay Hotel". As part of the renovations, a second-floor balcony was added to the southern and western sides of the hotel.
   The Bay Hotel was managed by a man named Markham. It's said that Fineberg found out about an illegal liquor still Markham had built in the attic, which was against Feinberg's religious upbringing. Feinberg told Markham that he wanted to meet to "talk about some problems".  Markham arranged a dinner meeting with Feinberg during which the liquor still problem was discussed. Markham professed his innocence. Feinberg retired for the night but never awoke. He died of food poisoning. In 1999, while remodeling the hotel annex, previous owners found the remains of circular copper piping commonly used to condense liquor in stills. 
   There have been many owners over the years. It had been named the "Cedar Key Hotel" in the 1920's and "Fowlers Wood" in the 1930's. The  hotel nearly burned to the ground during the depression, when it operated as a speak-easy and brothel. Each fire was quickly extinguished by the local fire department who, it is said, spent most of their spare time at the hotel as customers
   During World War II the hotel became run-down and unlivable. In 1946 Bessie and Loyal Gibbs bought the building and set out to revitalize it. They restored the place and renamed it the "Island Hotel". During their ownership, the hotel and bar became a notable hangout for local characters and celebrities alike. These included Pearl Buck, Vaughan Monroe, Tennessee Erie Ford, Francis Langford, Myrna Loy, Richard Boone and John MacDonald.
   Hurricane Easy lambasted Cedar Key in 1950, blowing the roof off the hotel. Major remodeling was required to make the building usable again. Loyal Gibbs died in 1962. Bessie continued to operate it until she retired due to health reasons in 1973. Bessie died two years later in a house fire at her small cottage home in Cedar Key.
   New owners continued to upgrade and improve the old building. During the early 1980's Jimmy Buffet performed in the Neptune Lounge and on the balcony. In 1984 the Island Hotel was listed on the National Register of Historic Places and the restaurant became nationally famous. 
   In the late 1980's, one owner, Marcia Rogers, converted the King Neptune Lounge into a juice bar. Her actions so infuriated the local patrons of the King Neptune Lounge, that they buried her in effigy outside the town hall.

Now some ghostly stories:

   Hotel staff and local patrons insist that the hotel is really haunted. It is said that there are at least 13 bona fide spirits occupying the old hotel.
    There is the story of the small black boy, about nine years old who died before the end of the Civil War.
   The way the story goes--this small boy was hired by the manager of the general store and post office to sweep-up and help around the property. Apparently the manager spotted the little boy putting something in his pocket and thinking he had witnessed the boy pilfering something, chased him out the back door. The boy was never seen or heard from again. About a year later, while cleaning out the basement water cistern, a five-foot deep 2,500 gallon cement tank, in preparation for liming (lime was painted in cistern tanks to help keep the water from souring),  the workers discovered the skeletal remains of a child. It is said the boy climbed into the cistern to hide from the manager, where he drowned. The basement is accessible through a trap door in the very back of the hotel. It is dark (some say as dark as the inside of a black cat) and eerie, with uneven floors and low beam supports. Down in that basement it is said that the ghost of that scared little boy hides. . . .
   There is the story of the Southern Army private soldier who stands guard on the second floor. No one seems to know the reason or the whole story, but sightings of this apparition out-number all of the others. It seems that every morning just as the sun begins to rise guests can see what appears to be a soldier in a Southern Army uniform standing guard at attention just inside the doors leading to the balcony. The vision lasts just a few seconds but has been seen by dozens of guests over the years. 
   Then there is the story of  Simon Feinberg, who according to folklore was poisoned by the hotel manager, Feinberg is said to be a "wandering ghost" who walks around the hotel, especially at night, appearing briefly to startled guests and staff. He too seems to be harmless at least if your name isn't Markham!
   There's another story of the ghost who visits guests staying in rooms 27 and 28. This spirit is said to be that of a murdered prostitute. . . an undocumented event that occurred during prohibition times when the hotel was a speak-easy and brothel. This shy ghost is quite friendly. She simply sits on the bed in the middle of the night and kisses guests on the cheek, then disappears in a smoky haze. 
   There are sightings of more recently departed people. Bessie Gibbs, who lived here for over 26 years, is said to move around the hotel rearranging furniture, pictures and closing doors. It seems her favorite trick is to lock a guest out of his room as he steps out for a moment. Guests have also seen a ghostly apparition walk through their room and through the walls in the middle of the night. They always describe a spirit resembling Bessie Gibbs. Bessie was a character in life, ever full of stories, jokes and playfulness. Her ghostly apparition continues just the way she was.
   A séance was once held in the hotel. The idea was to conjure up the spirit of Bessie Gibbs. The results, though unscientific, concluded that Bessie's upstairs sleeping room (Guest Room 29) is definitely haunted but that Bessie is not alone. Psychic investigation concludes that there as many as 13 ghosts in the hotel but that Bessie's is the most dominant.
    There is evidence that, in addition to those ghosts listed above, two Native American Indians, a fisherman and an unidentified tall, thin man are also making the hotel their post-earthly form home. One investigator claims that Bessie's room is probably a portal to another dimension. He also believes that the front of the hotel is another location with strong paranormal activity. Lights will flicker, doors open and close without a known cause. There are always cold spots, breezes and drafts without reason; and some report the pervasive feeling of being watched or followed.
   The Fox Network television series Haunted Inns & Mansions filmed a segment at the hotel in 1999. Whenever a local Fox affiliate anywhere in the United States replays this episode, reservations spike as people search for "proof" that ghosts actually do exist.

   What do you believe?