Bedding down in a picturesque palace in one of Europe’s most attractive capital cities sounds like a romantic dream. But one of the best hotels in Lisbon offers guests exactly that.

Palacete Chafariz D'El Rei is a charming boutique property located on the edge of the historic Alfama district. Easily recognized by a confectionery of decorative and architectural flourishes that distinguish the façade, the hotel nevertheless retains an air of refreshing anonymity.

Put simply, this is a choice of accommodation for the discerning traveler, where immersion in a destination’s history and culture is as requisite a demand as a good night’s sleep.

Vintage and reproduction furniture and antiques decorate the hotel's classically styled lounge at Palacete Chafariz D'El Rei — Photo courtesy of Paul Bernhardt

Just six suites occupy this beguiling little bolthole, including the fabulous Grande Torreão, housed in a tower and commanding stunning panoramic views of the waterfront and old town. Set over two floors, each room is generous in proportion and individually appointed to superlative standards, where contemporary finishes and amenities add a veneer of sophistication to the period setting.

Sunshine filtered through intricately patterned stained glass windows cast rainbow mosaics across polished floor tiles and honey-hued woodwork. Elaborate gilt-edged mouldings snake along walls and around ceilings.

Exuding grace and elegance, rooms also afford spellbinding views of the River Tagus.

Intricately patterned stained glass windows help color the hotel's public spaces — Photo courtesy of Paul Bernhardt

Featuring a fascinating combination of neoclassical, art nouveau and rococo design elements, the palace’s public areas are embellished with original and restored furniture and antiques.

The lounge is replete with plump bottle-green Chesterfields and a 300-year-old piano.

The neighboring breakfast room features a terrace that, in summer, is a blaze of purple bougainvillea. A gurgling fountain enhances the romantic appeal.

The splendid Mirror Lounge, designed in the Brazilian art nouveau style — Photo courtesy of Paul Bernhardt

But what truly defines Palacete Chafariz D'El Rei and its sense of occasion is the mesmerizing Mirror Lounge.

This beautiful room is the setting for the hotel’s renowned brunch, and its extraordinary allure is such that the salon is often called upon as a backdrop for film and television productions.

A series of enormous Venetian mirrors help accentuate the dimensions of this unique space, which is illuminated by blooms of crystal chandelier.

Open to non-residents, this is one of Lisbon’s most exquisite tearooms.

Gloriously comfortable king-sized beds guarantee a good night's sleep — Photo courtesy of Paul Bernhardt

Furnishing this extraordinary hotel – indeed, realizing the whole design concept behind the palace – was the responsibility of Rui Teixeira and his business partner Emilio Castillejos, who actually owns the building. 

The building dates from the turn of the 20th century and was originally home to one João António Santos, who made a fortune in Brazil. Santos built his mansion on the foundations of the original palace, which was destroyed in the 1755 earthquake.

Neglected and forgotten, the premises were used briefly as the offices of an import-export company in the 1990s before Castillejos took a huge gamble by purchasing the property after which Teixeira, whose professional background is in decorative arts restoration, set about refurbishing the dilapidated landmark. Both men had decided to turn it into an upscale hotel.

Beautifully appointed rooms combine traditional design elements with contemporary flourishes — Photo courtesy of Paul Bernhardt

“The challenge was frightening,” Teixeira remembers. “We used original blueprints from 1901 to renovate the rooms but had to almost completely refurnish the building. That was actually the fun part.”

Months were spent trawling antique stores across Portugal and Spain to achieve the vintage look.

“It was like traveling back in time,” says Teixeira, who points out that where original artifacts could not be sourced, reproductions were ordered.

Guest suites feature en-suite bathrooms furnished with period artifacts, such as marble sinks and enamel bathtubs — Photo courtesy of Paul Bernhardt

The pair spent nearly five years diligently piecing together the interior, modifying where necessary to meet stringent health and safety requirements.

All the time, they were mindful of the fact that the property partly sits over a national monument. (Chafariz D'El Rei means "king’s fountain" and refers to the monumental fountain situated in front of the hotel, built during the 17th century to provide clean drinking water to the population.)

Breakfast is served in refined, gilt-edged surroundings — Photo courtesy of Paul Bernhardt

Palacete Chafariz D'El Rei opened to widespread acclaim in 2010, and Teixeira, who is also the hotel’s general manager, presides over a select team of staff who themselves have won plaudits for their hospitality and professionalism.

The hotel is located in Lisbon's historic Alfama district — Photo courtesy of Paul Bernhardt

Meanwhile, the palace’s restoration project has not yet ended.

Teixeira and his partner will be opening a basement bar in 2016 that will reveal the interior of the aforementioned king’s fountain monument. The prospect of a drink in hitherto unknown surroundings is a tantalizing one.

The bar will no doubt serve as another reason to bed down at this singular Lisbon hotel.