In the early days of the last century the hotel was the family home of David Macdonald. After accompanying the Younghusband Mission to Lhasa in 1904 as interpreter, Macdonald was posted to Tibet as a British Trade Agent, serving in Yatung and Gyantse until his retirement in 1924. Macdonald assisted the 13th Dalai Lama's escape from Tibet in 1910, and he was later invited to Lhasa in 1921. Prior to his retirement he served briefly as Britain's Political Officer in Sikkim, in charge of Britain's relations with Tibet, Bhutan and Sikkim.

Reception at Heritage Block After he retired, with his large family grown up, Macdonald turned the family home into a Hotel, and it has remained in the Macdonald family ever since. It was here that he wrote his books “Land of the Lama” and “Twenty Years in Tibet”. For many years it was managed by Macdonald's three eldest daughters, Annie Perry, whose husband also served in Tibet, Vera Macdonald and Vicky Williams. Today it is managed by Nilam and Tim Macdonald, David Macdonald's grandson. They have ensured it remains, in the words of the distinguished travel writer James Cameron, “a collector's piece among hotels” and that little has changed since, except perhaps with the addition of two annexes, to cater to the growing influx of travellers. Cameron wrote, "this is a commonplace name for a most exceptional place... no one was there an hour in the inescapable community life of the place". It is a hotel of real charm and character, with an atmosphere redolent of its close association with Himalayan history.

The great names of the region have all been guests here. It has been home to Everest expeditions from the days of Mallory and Irving in the 1920's. Hillary and Tenzing were frequent visitors, while it has also played host to Mme Alexandra David-Neel, Charles Bell, and many of the other British officials who travelled to Tibet in the first half of the twentieth century, as well to other Tibetologists such as Prince Peter of Greece, Rinchen Dolma Taring, authoress of “Daughter of Tibet”, Dr. Joseph Rock, Heinrich Harrer, author of “Seven Years in Tibet”, Sir Basil Gould, formerly Political Officer, Sikkim, and James Cameron, author “Point of Departure”.