Lisbon, Portugal’s capital, has experienced an unprecedented boom since it became the European City of Culture in 1994, and then hosted Expo 98 and the Euro 2004 Soccer Championship. These events resulted in a huge leap in visitors and paved the way for new roads, hotels, and a modern and efficient metro system.

As part of a major overhaul of Lisbon's historic patrimony, Mayor Santana Lopes has encouraged businesses and government to convert crumbling palaces and state buildings into mid-sized luxury hotels, museums, art galleries and modern residence blocks. One such grand example is the Pálacio Belmonte.

Imagine a hotel and exclusive business club which takes hours to find, that taxi drivers have never heard of, and where you are greeted by a startled maid in complete darkness in the foyer, and where you and the rather louche receptionist seem to be the only guests. Arriving at the Pálacio Belmonte, a converted palace housed inside Lisbon's Moorish castle, reminded me of a horror movie where the guests are spirited away never to be seen again.

The Pálacio Belmonte in Lisbon, Portugal, is a converted palace housed inside a Moorish castle.

Winding granite steps took me to my peaceful and grandiose third-floor room decorated in yellow and creamy beige salvage silks. The suite was named after a contemporary philosopher named Agostinho da Silva and featured genuine 18th-century furnishings, including a huge gilt mirror, blue tile panels, a large oil canvas by Claude Guichard, two drawings dated 1870 and a wooden cupboard housing a mysterious religious oil painting.

A tremendous impromptu thunderstorm added to the atmosphere, and rattling, religious icons spooked me even more. As I intrepidly ventured out of my room to explore, I noticed the most curious thing — bookshelves everywhere were filled with nothing but topics of alternative lifestyles. Titles such as, “Radical Agriculture” or “Cornucopia — A Source Book of Edible Plants,” lined the shelves. As I scanned the bookshelves, I noticed that there was an eerie silence — no music or lights, nobody there, no restaurant or bar — just a vast high-ceilinged coffin of a hotel.

Thankfully, when I awoke the next morning, daylight put a new perspective on things and I was relieved to find other guests munching on breakfast. I was ushered outside to a warm terrace overlooking Alfama’s (the medieval Arab quarter) spectacular churches and the southeastern stretch of the Tagus River (Portuguese Tejo), which flows into the Atlantic Ocean from here.

A huge breakfast table was laid out and the waiter asked what I wanted. I ordered a smoked salmon egg scramble and received my request within 10 minutes. As I ate, the sunshine poured down and lit up the lush tropical garden and a stylish black granite swimming pool surrounded by a wooden deck. I recognized the garden from movie scenes in Wim Wenders’ “Lisbon Story” (1994) and Roberto Faenza’s “Afirma Pereira” (1996), which starred Marcello Mastroianni as a lonely Portuguese journalist. Both films had otherwise left little impression.