Allan Smith, 40, and David Phayer, 41, started the fire in a wardrobe of the Palm Beach Hotel, South Promenade, which rapidly spread through the empty building.
Following the blaze the hotel’s owner, Etoile Patel, has spent £11,000 bringing the property up to a standard where it can be put on the market.
But she said: “It is difficult to put into words the amount of stress, anxiety and financial loss I have suffered since this needless crime.”
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Smith and Phayer were caught climbing out of a window of the hotel as flames took hold on the upper floor in the early hours of 5 June 2014.
Police officers saw torchlight shining through the third floor windows and the orange glow of the fire starting to take hold after being called to reports of suspicious activity at the Palm Beach at around 1.30am.
Smith and Phayer admitted they had been in the building but denied they had started the blaze.
As 70 firefighters battled the blaze overnight, residents from neighbouring properties were evacuated from their homes and put up in an emergency rest centre, which was set up at South Shore Academy nearby.
Judge Pamela Badley, sentencing, said: “It is clear this was a problem building well before the fire started.”
In December 2010 the seafront property closed its doors after burst pipes caused extensive flood damage.
During an ongoing dispute with the insurance company - which would not pay out for repairs - the hotel fell into disrepair and became a magnet for squatters and children who would be rescued from the building in the months before the blaze.
Smith and Phayer were arrested leaving the building and Smith was found to be carrying a torch and a clipper lighter.
Both men insisted they had entered the hotel looking for items to steal for Phayer’s flat but claimed they had not gone further than the second floor.
They claimed to have fled the building when they heard footsteps overhead - but no-one was ever found in or leaving the building.
Smith, of Millington Avenue, South Shore and Phayer, of Burlington Road, also South Shore, were convicted of arson following a trial at Preston Crown Court.
Judge Badley said: “This hotel was in a very prominent area of Blackpool and those who were concerned with commercial activity close to the hotel were concerned about its status.
“Like many fires you had no idea of the consequences of your actions.
“Although the fire was setting fire to a few clothes in a wardrobe, you started a fire which greatly reduced the value of the premises.”
She accepted since the fire both men had taken positive steps to address their substance misuse problems and Smith has started a new family with his partner - who the court heard is a stabilising influence.
She jailed them for 30 months each.
Last year a deal was agreed to convert the fire damaged Palm Beach and neighbouring Bourne Hotel into a 131-room Hampton by Hilton hotel after council bosses dubbed it an eyesore and an embarrassment to the resort.