I can help, as this is what I do, I work for one the national firm of agents and surveyors, you do need specialist advise. My parents also sold their hotel about 2 years ago and I got them to use another firm as I didn't want to deal with it, so I wont give you the hard sell!
Firstly I don't know who your father in law is using to sell the hotel, but there is hardly any bank funding available at the moment, which is the main problem. You say its been valued at £1.2m, is this from a formal valuation or market valuation? Unless your father in law's adjusted net profit (or EBITDA) stacks up, it needs to be either £120k - £200k, it will be very hard to find a buyer who can get the money from a bank. Therefore you are likely to need a cash buyer or someone with loads of cash.
Secondly is the hotel in good condition? Does it need money spent on it? And has the trade dropped dramatically? If so, it may not look the most attractive option when you consider all the other hotels that are on the market and in administration (i.e. very cheap) at the moment.
Does every room have en suite facilities? If not, I have been hearing that the banks wont lend. Is it branded? How big is it? Should he be considering alternative use?
I know this isn't overly positive, I won't lie it is shit out there at the moment, but everything needs to be the right price to sell. The good news, hoowever is that he is in Cumbria and that is an area still in demand.
Feel free to call me to discuss, I have happy to give you very frank advice, but you will need to call me today as I am going away for a couple of days from tomorrow then back on Friday night. Will 07786 234 006.