I believe I have heard that Mr. Gray either saw or heard stories about WWII soldiers and thought about what they must think as they lay dieing in the midst of all that strife. While I don't believe he has every said what he means by all the lines. I Always imagine a soldier who has been shot in the middle of a battlefield. Both side shooting each other over his head. As he lay there dieing, he begins to think about the sweetheart he left at home as the battle unfolds.
As to the lines you quote, once again, to me, it represents the time where he is slipping away. Not seeing the Elysium fields, not seeing a fiery hell. But seeing the bright lights of a local, or hometown, hotel, where he used to take her. As the either, next volley of fire shoot across him, or the next ( and final ) wave of pain goes by, he dies going to his personal heaven, dancing with his love.
And yes there is a Bay Hotel...Cornwall I think?