The Grand Ocean Hotel sits like a beached wreck on the hill overlooking the sea at Saltdean. Built in 1938 in the image of the great ocean-going liners, its heyday was in the 1950s and 60s when it became the first Butlins hotel, for a time home to Billy Butlin himself. Its art deco splendours have long since faded, however, and by the time Scott Graham and Steven Hoggett of Frantic Assembly visited the hotel last December, its fate was sealed. While a few elderly guests shuffled around the dingy ballroom, the staff were preparing to shut the doors of the Grand Ocean for the very last time. By this time next year, the developers will have moved in, to turn the building into flats.
Before this transformation takes place, Graham and Hoggett are bringing the place alive one last time with Dirty Wonderland, a fantasy written by Michael Wynne and set in a faded hotel on the final weekend before its closure. While the audience - 30 at a time - is herded around as prospective buyers of the new flats, they will witness anarchy, hedonism and confusion as the lives of staff and guests become entwined.
Graham and Hoggett's only previous experience of site-specific theatre was a version of the Jacobean revenge tragedy The Changeling in the men's toilets at the National Theatre Studio. As site-specific virgins, they had imagined doing Dirty Wonderland in a couple of years' time as a small-scale project in a bed and breakfast. But when the newly revitalised Brighton festival came up with the 300-bed Grand Ocean Hotel and an offer to underwrite the costs, they couldn't refuse. So here they are in sub-arctic conditions in the half-derelict building, where cockroaches scuttle and advertisements for karaoke nights still hang sadly off the walls, marshalling a cast of 30 and contemplating how to guide the audience's attention.
The trouble is the view. "That view," says Graham, waving his arm towards the vast glass windows that look over the sea, "is the enemy. How are we ever going to get the audience to look at what we want them to look at, when there's a view like that?"
He is half joking. Graham and Hoggett know that the view is a gift, and they are too experienced at manipulating audiences in traditional theatre spaces not to know what you can do with carefully placed lighting and mirrors. But with the first performance in less than a week, and time now putting constraints upon the imagination, both are also aware that working in site-specific mode has its limitations as well as its liberations. Lighting for just one room, which would be available at a touch of a computer in a theatre, takes two days to set up here, and there are more than 30 different rooms and spaces being used. And for the first time, Graham and Hoggett have to consider how you get an unseated audience to go where you want them to go, rather than where they fancy - even though the logistics of herding an audience along the corridors and up a circular staircase can't actually be tested until people are here.
"It may be site-specific but Dirty Wonderland isn't some kind of installation that they can just amble about and go where they want," says Graham. "It has a narrative structure and rules, and we have to find a way to teach the audience those rules."
Allowing the audience to amble around where they want is exactly the intention of Dreamthinkspeak's Underground, another project from the Brighton festival. Although inspired by a classic narrative, Dostoyevsky's Crime and Punishment, and taking place in a traditional space, Brighton's Theatre Royal, Underground seems intent on questioning the very experience of theatre itself. The audience enter three at a time through the stage door and after that they can wander around the building, where they may stumble across a vodka den in the orchestra pit, witness Raskolnikov's gruesome murder of the pawnbroker in one of the theatre dressing rooms, or peer underneath the stage and glimpse the murdered woman searching for her lost jewels and lost life. There is no story in the traditional sense of a linear narrative, merely a series of fragments that the audience can gather together and make sense of however they choose.
In a way, this is just a more subtle form of audience manipulation, as director Tristan Sharps admits: "When you take away all the traditional rules and break the context in which they are watching a piece of theatre, they have to surrender to it. Without the rules to hide behind, they have to engage with it. That is why our work is as much about the audience as it is about the performance."
Unlike Frantic's Dirty Wonderland, which has a thematic link to the space in which it is being performed, Sharps' work simply uses an interesting space as the setting for a piece of theatre that he wants to create. It is, he says, in effect "site unspecific". This is his third production for Dreamthinkspeak; previously he has created work for Somerset House in London and South Hill Park in Berkshire.
He has spent six weeks haunting the Theatre Royal, getting to know every nook and cranny. "I've come to love this building, the way that it has had to expand itself surreptitiously because of the surrounding cottages. It makes it all the more interesting as a space to use. If you are going to do this kind of work, you have to understand the space. You can't let it dominate you, but you have to search out its little gifts."
Frantic are lucky enough to have the run of the Grand Ocean Hotel, whereas Sharps will have just two days to transform the backstage areas and public spaces of the Theatre Royal into the hallucinatory landscape of Raskolnikov's 19th-century St Petersburg. Will he manage it?
"It will be a challenge. But I like a challenge. Normally we'd have a few people working for two weeks, but for this we have lots of people working for 48 hours. It's worth it to make the work. The world is a fragmented place and narratives and theatrical experiences that move from A to B to C just can't describe it. Theatre has to find new ways to respond to the world."
· Dirty Wonderland is at the Grand Ocean Hotel, Brighton, from Wednesday until May 29. Underground is at the Theatre Royal, Brighton, from May 24 to 28. Box office: 01273 709709.