TWO men have been arrested on suspicion of murder after a hotel blaze that killed three people.

Police have announced that the fire, at the Penhallow Hotel in Newquay, Cornwall, in the summer is now being treated as arson.

The hotel at the time of the blaze was full of holidaymakers on a trip organised by Great Harwood company Robinson's Holidays.

Darwen mum-of-three Susan Goodlad, 36, managed to escape the flames with her children Dean, 11, Karly, seven and Zoe, four, along with her parents Ken, 62, and Brenda, 65.

She said she was shocked to learn that the blaze was now being treated as a murder investigation.

Mrs Goodlad, of Argyle Street, Darwen, said: "It has been a real bombshell.

"We are struggling to get over what happened and to hear that the fire was started deliberately is terrible.

"How someone could be so callous to endanger so many innocent lives is beyond me."

Two men, aged 44 and 21, have been arrested on suspicion of murder and are now being interviewed in police stations in Cornwall.

The blaze last summer claimed the lives of Joan Harper, 80, Peter Hughes, 43, and his mother Monica, 86.

Around 90 people escaped from the fire, which police described as the worst the country had seen in 30 years, as it ripped through the building in the early hours of Saturday, August 18.

Police said that painstaking inquiries by fire service investigators and independent experts had established that the fire was started deliberately.

Detective Chief Superintendent Chris Boarland said the force was in no doubt that the blaze was arson.

"This force can come to no other conclusion other than the fact that this fire was started deliberately," he said.

"The fire at the Penhallow Hotel is now officially a murder investigation.

"Whether it was one person or some people, I think that it is unlikely that someone has not spoken about this at some point.

"As far as a motive, I have no idea - that can only be in the mind of the person responsible."

He said it was a "miracle" that more were not killed in the fire.

The manager of the hotel at the time of the blaze was East Lancashire man Andy Woollam.

He lived in Blackburn and Great Harwood before taking up his role at the Penhallow Hotel five and a half years ago.

When the blaze broke out 41-year-old Mr Woollam was in a nearby staff flat with his 13-year-old son, who lives in Oswaldtwistle with his mother but who was on holiday with him.

Speaking at the time, he said that the fire had left him "absolutely traumatised".