The extension of Adelaide's O-Bahn guided busway has been blamed for the closure of a city hotel with the loss of 20 jobs.

The Royal Hotel has shut its doors and the leaseholder has gone into voluntary administration after an 80 per cent drop in trade since the start of the nearby busway construction and roadworks.

Administrator Nick Cooper says the business has relatively minor debts, mainly to a secured creditor and the tax office, but the leaseholder is not prepared to continue operating at a loss.

Attempts are being made to sell the lease for the hotel.

construction“O-Bahn roadworks have caused major disruptions to traffic flows outside the hotel and severely restricted access to the carpark,” Mr Cooper said.

“At the same time, noise and dust have crippled lunchtime and evening trade.

Mr Cooper said because the disruptions were expected to continue at least for another 12 months, the leaseholder felt he had no option other than to enter administration.

The $160 million O-Bahn project includes the construction of a tunnel to take the guided busway under a section of Adelaide’s Hackney Road and through the nearby parklands.

It is expected to ease congestion on Hackney Road and improve travel times for bus commuters and motorists.

Work should be complete by the end of 2017.