Why was a hospital in England needed, and why could the existing hospitals not have been utilized better? Since the front-line fighting was going on in France and Belgium, would it not have made more sense to establish a hospital there, closer to the wounded soldiers? In fact the British Military authorities had initially proposed establishing a hospital for the wounded Indian soldiers at Orleans. The French military though was not keen on the idea as they felt that it would put a strain on their railroad system and recommended establishing a hospital in England or Algeria. Thus the War Office decided to reluctantly establish hospitals in England rather than France for wounded Indian soldiers. 
The initial hospital facilities established in England by converting the two hotels in Brockenhurst and use of the Royal Victoria Hospital in Netley in Southampton were inadequate and overcrowded. Even King George on a visit remarked on the poor conditions at Brockenhust in November 1914.  These facilities were not a long-term solution.
The Mayor of Brighton, John Otter had already offered the services of Brighton to the War Office. When Sir Walter Lawrence accompanied by Major P.S. Lelean went to Brighton on November 21, 1914, had the decision to select the Royal Pavilion already been made?
Sir Walter Lawrence to Lord Hardinge, 18 March 1915
‘I suggested to Lord Kitchener that… I should be allowed to take up two large hotels in Brighton. He gave me permission and on the 21st I went down to Brighton. I saw the local authorities there, and instead of taking up hotels, which are unsuitable and costly, I secured from the Corporation of Brighton the buildings of the Pavilion and the Dome.’ 
The initial plan and mandate that Lawrence had when he met Alderman Otter had been to secure two hotels, not the Royal Pavilion. The two hotels were a key economic asset to the town and the Brighton authorities were reluctant to hand them over to the War Office. Instead they offered a pier and a racecourse, but these were clearly inadequate as they were not enclosed structures. Instead Lawrence procured the Royal Pavilion complex and thought that it would be particularly suitable because of its ‘oriental domes and charming gardens’. 
This evidence indicates that the decision to procure the Royal Pavilion in Brighton was not pre-meditated. The Royal Pavilion was offered by the Brighton officials to Lawrence because it had less economic value to them then the two hotels that Lawrence had initially wanted. The Royal Pavilion was not chosen because of its unique architecture or because it would make the Indian soldiers feel more at home, nor was it chosen for its propaganda value. Clearly these variables were afterthoughts and not part of the initial decision making process.
Neither was the Royal Pavilion chosen because it was the best suited structure for a hospital conversion in terms of logistics:
Lt. Colonel J.N. MacLeod, Commanding Officer Royal Pavilion Hospital to Sir Walter Lawrence, Dec.3, 1914
‘We are pushing along at highest pressure with the difficult problem of making a hospital out of this most unsuitable building’ 
1. Samuel Hyson & Alan Lester, "British India on trial: Brighton Military Hospitals and the politics of empire in World War I", Journal of Historical Geography 38 (2012) 20
3. Kevin Bacon, "The Royal Pavilion as a Vision of Empire" (powerpoint presentation, The Royal Pavilion and Museums, Brighton & Hove, 2012)
4. Samuel Hyson & Alan Lester, "British India on trial: Brighton Military Hospitals and the politics of empire in World War I", Journal of Historical Geography 38 (2012) 21
5. Kevin Bacon, "The Royal Pavilion as a Vision of Empire" (powerpoint presentation, The Royal Pavilion and Museums, Brighton & Hove, 2012)