As one of the few stops on the little used overland route between the settlement of Melbourne and the thriving township of Geelong, the inn struggled for survival. Passing trade was scarce, with many travellers preferring to use the busy sea route rather than the rough, stony track across the plain. The surrounding area could provide little support, being occupied only by the few squatters who had settled the area bordering the Little River in the late 1830s.

For many years, the Traveller's Rest comprised the complete settlement at Rothwell. There was a regular turnover of licensees during those first years, and hardship and tragedy shadowed many of those who tried their luck, culminating in 1851 when the Traveller's Rest burned to the ground.

In 1852, the township of Rothwell was officially proclaimed. That same year, planning of a railroad began to link the settlements of Geelong and Melbourne, with the original route planned to follow the line of the road with a station situated at Rothwell. The planning of the railway created much excitement in the township. The land was surveyed and divided, roads were planned, and many large and small allotments were sold surrounding the site of the Traveller's Rest.

As surveying of the railway line progressed, it became clear that the planned route through Rothwell would be unsuitable due to the unstable nature of the ground in the area. In fact, the section of the road to the south-west of the Inn was known locally as "The Glue Pot", becoming an almost impassable quagmire following heavy rain. Later that year, construction of the railroad began at Geelong, following a revised route north of the Rothwell township.

In 1853, a licence was granted to William Perrin for the rebuilding of the hotel. The Rothwell Inn opened that year on the same site as the original Traveller's Rest.

In 1856, the railway line was completed to Little River, with the original station built on the Geelong side of the river, north of the line. With the arrival of the railway, a new township began to form around the station. Two new hotels would arrive that same year, the Station Peak Terminus Hotel, situated near the station, and the Bowling Green Hotel, on the Werribee side of the river, south of the line. With competition from the new township, Rothwell again began to struggle to survive. To make matters worse, the completion of the railway line through to Williamstown in 1857 reduced the appeal of Little River as a destination for day-trippers.

Over the following years, the fortunes of both towns would continue to wax and wane. The arrival of the railway in the early 1860s brought with it not only passengers and goods, but also a steady stream of new arrivals from the large towns eager to fulfil their dreams of a life on the land. This presented a tantalising opportunity to budding entrepreneurs who, with varying degrees of success, split up and sold small parcels of land to prospective farmers.

As the towns began to boom, construction of schools, churches and bridges followed in order to support the growing population. The construction of a grand bluestone Railway Station on the Werribee side of the river, completed in 1864, reflected the expectations for the prosperity of the new town. In 1867, the new township became known as Little River.

However, before long the ever-present threat of drought, flood, fire and pest had taken their toll, and many of these new farmers left the land with their dreams shattered. By the late 1860s, the populations of Rothwell and Little River had dwindled once again.

In 1923, the closure of unmade and unused roads signalled the end of Rothwell as a township. In 1958, the Rothwell Inn was again destroyed by fire, but this time there would be no reconstruction. As Rothwell passed into history, the township of Little River continued to thrive, becoming a small but active rural town.

Today the township of Little River retains its agricultural origins, but continues to evolve, as new arrivals once again flock from the cities with dreams of a rural lifestyle. The ruins of the Rothwell Inn remain standing, silhouetted against the You Yangs in the distance, as a silent reminder of the rich history of the area.