This year marks the 40th anniversary of the reunification of Jerusalem, when Israel annexed the Arab eastern section of the city after the Six-Day War. Despite continuing strife between its rival factions, the holy city has flourished in the ensuing decades as a pilgrimage site for followers of the Jewish, Christian, and Muslim faiths. Throughout it all, the American Colony Hotel has stood as a bastion of tolerance, tranquillity, and taste.

The main building of the American Colony, which in the late 19th century served as a residence for an extended family from the United States, opened as a hotel in the early 1900s. The hotel today—with its Arab staff and East Jerusalem location—draws guests far different from those of the luxury hotels in the city’s Jewish western section. Politicians, journalists, and jet setters fill the hotel’s verdant courtyard café, where progressive Palestinians and Israelis meet to drink and deal. Come winter, the crowd heads for the hotel’s Cellar Bar, a lively watering hole located behind thick walls on the basement level.

Beyond the buzz of the bars, the American Colony offers 73 rooms and 13 suites that are spread among the hotel’s original building and its newer, executive-friendly structures. Armenian tiles and gilded, handpainted ceilings in the main house betray its origins as the former home of a Turkish pasha. The building’s most desirable accommodation, the Pasha Suite, is appointed with mother-of-pearl furniture and affords prime views of East Jerusalem.

LOCATION In the heart of Arab East Jerusalem, within walking distance of the Old City and Damascus Gate.

ACCOMMODATIONS The 73 rooms and 13 suites are split between the original wing, which dates to 1860, and newer buildings added in the 1970s and ’80s. The former—with its arches, domes, rustic furnishings, and city views—is the better option for vacationers, while the latter structures best serve business travelers.

FACILITIES A heated outdoor swimming pool, fitness center, and sauna, plus a bookstore and antiques shop.

DINING Restaurants range from a casual courtyard café to the formal Arabesque restaurant. Not to miss is the Saturday brunch, which consists of a feast of regional and Continental foods.

CONCIERGE RECOMMENDS Visit the Dome of the Rock, a gold-covered shrine built by the Muslim ruler Abd el-Malik in the seventh century. The structure is the world’s oldest Islamic monument and a historically significant site for the Jewish and Christian faiths.

RATES From $325 for a standard room in the hotel’s contemporary wings to $740 for the one-bedroom Pasha Suite in the historic building.