As a child I fantasized about living in a palace. So when I awoke during a recent trip to Portugal and found myself in a fairy-tale room overlooking a courtyard fountain, I thought my wish had been granted.

Then I remembered our arrival the previous evening. As we wove our way up the mountain through the dark woods of the Bussaco National Forest, I caught tantalizing glimpses of the top of the Palace Hotel. And when we rounded the last corner, I saw the palace silhouetted against the sunset and surrounded by gardens. I nearly gasped with the realization that I'd soon be unpacking to spend the night in a dream.

What makes the Bussaco Palace so magical is its setting. Located amidst 250 acres of centuries-old forest and removed from busy roadways, it's a serene place--not surprising since it was originally a monastic retreat. The Carmelite monks walled in their forest to keep the world at bay; the trees (about 700 varieties) were even given papal protection in 1632. In addition to the native species of trees, you'll find many foreign varieties brought back centuries ago by Portuguese explorers.

The monks built contemplative paths through woods dotted with shrines and grottos. The Sacra Via, with its Stations of the Cross, leads up to the Cruz Alta ("high cross") at the top of the mountain. Make the climb and you're rewarded with a spectacular panorama of the valley and the Palace. Only part of the original monastery survives, but you can still see the cell where the Duke of Wellington slept the night before he fought a decisive battle against Napoleon's troops on the ridge above the monastery in 1810.

Bussaco's location is not only tranquil, it's convenient. The spa town of Luso with it thermal baths is only two miles away. Coimbra, once the capital of Portugal and home to the country's oldest university, is only a nine- mile drive. You'll know the college students when you see them; in addition to their school uniforms, they still wear traditional black wool capes that haven't changed much since the Renaissance. At the mouth of the Douro River, 60 miles away, is the city of Porto, which has been designated the cultural capital of Europe for 2001.

The Palace, commissioned by King Carlos in 1888, served as a hunting lodge and royal retreat from the heat of the southern summers. Portugal's glorious maritime past is celebrated in its neo-Manueline-style architecture, a sort of over-the-top Rococo replete with sea shells, ropes, fish, anchors and all things oceanic. After the royal family went into exile in England at the turn of the last century, the palace came under the management of the Alexandre de Almeida family. In 1917, the family opened the estate as an historic hotel.

In the evening, guests descend the grand staircase and proceed to the dining room. With its arched windows overlooking the gardens and historic murals rising to the carved wood ceiling, the room is a magnificent setting for the delicious Portuguese and classic French cuisine. I recommend a regional specialty--roast suckling pig. But no matter which entrée you choose, don't miss the Bussaco wines that are bottled in very limited quantities in the basement of the Palace. Drink up while you have the chance because this is one souvenir you can't take home; the hotel doesn't have enough bottles to sell to visitors. After dinner you can retire to the salon with its rich, carved wood and comfortable seating for a glass of, naturally, port.

Bussaco Palace Hotel
60 rooms, 6 suites
Rates range from $87 for a single room to $920 for the Imperial Suite. Doubles cost $110-179.
Phone: 800-526-8539 or in Portugal; 231-930101
www.small-hotel.com/bussac

(Kim Lee is an editorial assistant and frequent contributor to Rudy Maxa's Traveler.)

April 2001