The Factory Hotel is the first Dungeon of YIIK and sits north just outside of Frankton. It hosts the first boss fight of the game, Wilhelm. It is supposedly the location of the Elevator Girl footage, and Alex finds Sammy here.
When Michael and Alex go to take pictures, they find a new room containing an entity. Later, after meeting Rory, a staircase appears on the outside of the Factory Hotel, leading to Sammy's room. This was added in 1.25 to make it easier to get the Broken Record.