Part of a program to modernise the city, it was designed by noted Peruvian architect Rafael Marquina y Bueno and built in state property in 1924 to be the first large, modern hotel built in Lima, and with the specific intent of hosting foreign delegations for the 1924 centennial celebrations of the 1824 Battle of Ayacucho, a decisive military encounter during the Peruvian War of Independence.

[4] In the 1940s and 1950s, the hotel attracted Hollywood movie stars such as Orson Welles, Ava Gardner, and John Wayne, where many also discovered the local cocktail, the Pisco Sour.

During the early 20th century, the municipal government intended to widen the Callejón de Petateros with the intent of building an avenue that would join the Plaza Mayor with a projected public square five blocks to the south.

[7] As part of the extensive renovation works that took place for the 1921 centennial celebrations in Lima, a makeshift building was built on the empty 4,000 m2 site to house an industry fair,[b] commonly called the Cardboard Palace (Spanish: Palacio de cartón) by locals.

[1] The hotel's construction was the initiative of brothers Fernando and Augusto N. Wiese [es], who commissioned the U.S. Company Fred T. Ley y Cía, and was designed by noted architect Rafael Marquina y Bueno.