In fact, the sign changed in some way for every episode.
Here's a link explaining the background to this and what the sign said:
http://www.thefawltytowersguide.co.uk/fawltytowersanagrams.htm
Fawlty Towers Anagrams
The paperboy, who makes an appearance in the first few minutes of the first episode (A Touch of Class), is revealed to be the practical joker who rearranges the letters on the hotel sign. He is physically seen doing this in The Psychiatrist, an episode in the second series. His motive for doing this is probably because of some grudge with the misanthropic Basil. All the Fawlty Towers signs are shown in order below. Episode 6, The Germans, is missing as it begins at a hospital. Note that only episode 11, The Anniversary, with the sign reading "Flowery ****s" is a true anagram.
(There are pictures in the original, but they haven't come out here)
Episode 1 - A Touch of Class: Fawlty Towers (the letter S is cockeyed)
Episode 2 - The Builders: Fawlty Tower (the letter L is cockeyed)
Episode 3 - The Wedding Party: Fawty Tower (the letter W is cockeyed)
Episode 4 - The Hotel Inspectors: Fawty Toer
Episode 5 - Gourmet Night: Warty Towels
Episode 6 - The Germans: No sign (The action starts at a hospital)
Episode 7 - Communication Problems: Fawlty Tower (the letter L is cockeyed)
Episode 8 - The Psychiatrist: Watery Fowls
Episode 9 - Waldorf Salad: Flay Otters
Episode 10 - The Kipper and the Corpse: Fatty Owls
Episode 11 - The Anniversary: Flowery ****s
Episode 12 - Basil the Rat: Farty Towels