Great Keppel Island Hideaway co-owner Sean Appleton says his staff are battling to save three houses at the resort, off Rockhampton.
The resort has already lost three decks since Dylan crossed the north Queensland coast early on Friday.
Mr Appleton says staff had used a tonne of sand to protect the property in recent days, but to no avail.
The swell was just too big, he said.
"It was no greater than we anticipated, but it was greater than we could stop," he told AAP.
"We had no hope."
Mr Appleton said staff were frantically trying to save the three houses at risk, but it was pointless given they were already hanging over the edge of sand dunes.
"We've got 250 beds here, but losing them rapidly," he said.
Mr Appleton said the damage might have been avoided if an application made to Rockhampton Regional Council two years to have a rock wall erected to protect the resort hadn't been rejected.
It would have saved about 150 metres of beachfront on Great Keppel Island, he said.
Mr Appleton said there was now a risk of saltwater spreading behind the resort and into fresh water areas on the island.
"That'll just be a disaster for the whole place," he said.
Mr Appleton said repairs to the houses would cost at least $300,000, but the damage bill was expected to be greater, given the swells were still battering the coastline.
