In around 1898, painter Christian Delago purchased a house beneath the art school, where he and his wife Josefina Schmalzl established a coffee house; by 1906, they had expanded it to the Dolomitenhotel Madonna. Delago also relocated his workshop to the hotel, which boasted 25 bedrooms, a garden, a veranda, and an art studio for guests.

The development of Gröden all began with the Ustaria dl Baga, now the Grödnerhof. In 1911, sculptor Ferdinand Perathoner (dl Baga) built a villa complete with workshop on one of the meadows of the Vidlonch farm and, just two years later, added a coffee house for aristocratic spa guests.

In the early 1920s, the Demetz-Bernardi family purchased the property and, in the years to follow, the neighbouring “Schattenheim.” The buildings were united, and, over the years, the modest guesthouse transformed to become the five-star Relais & Châteaux Hotel.